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Panel backs new, need-based lottery scholarship

by Neal Earley | March 22, 2023 at 12:00 a.m.
The Arkansas Capitol building is seen in this file photo.

A joint committee of state senators and representatives approved a bill last week to create a needs-based scholarship program.

The bill was approved last Wednesday and would amend the Arkansas Academic Challenge Scholarship to include additional funds for students based on their financial needs. The proposed needs-based scholarship would be called the Arkansas Challenge Plus Scholarship.

The state would use the Free Application for Federal Student Aid, also known as FAFSA, to determine eligibility for the scholarship and would dole out up to $5,000 on a "sliding scale" based on need, according to Maria Markham, director of the Arkansas Division of Higher Education.

"We use the same calculation the federal government uses to calculate Pell awards, and we would increase the award amount for our students with the most need," Markham said.

Under the Academic Challenge Scholarship, which is funded by the lottery and $20 million in general revenue funds, students are awarded funds based on their year in college. College freshmen attending a four-year institution are awarded $1,000, sophomores and juniors are awarded $4,000 and seniors can receive $5,000 from the scholarship program.

Freshmen attending a two-year college can receive $1,000, with sophomores being awarded $3,000. The scholarship is open to students regardless of their financial need.

In the 2021 legislative session, then-Gov. Asa Hutchinson proposed creating a needs-based scholarship program.

Senate Bill 248, sponsored by Sen. Jane English, R-North Little Rock, is based on the previous proposal. The scholarship is open to traditional and nontraditional students. To be eligible for the scholarship, students must score at least a 19 on the ACT or an equivalent score on a similar test.

The Division of Higher Education has awarded challenge scholarships to 28,421 students in fiscal year 2023 totaling $53.5 million, according to Nick Fuller, the division's assistant director of finance. In the previous fiscal year, the division awarded $75.1 million in scholarships to 28,716 students.

The proposed Challenge Academic Scholarship Plus would cost the state roughly $13.5 million, which would be funded by excess lottery proceeds, according to an estimate from the Department of Finance and Administration. How much the Department of Education would distribute to students each year on the scholarship would depend on the lottery revenue that funds the state's various academic scholarships.

The state previously had need-based scholarships but lawmakers canceled the programs in 2017, with Markham calling them "unsuccessful."

"[For] low-income students, financial aid is the number one barrier for access to institutions, and this would be making a significant impact on their ability to afford a higher education," Markham said.

The committee also approved a bill to extend the Concurrent Challenge Scholarship, a program for high school students taking college courses, to 10th grade students.

House Bill 1333 originally would have made ninth grade students eligible for the scholarship, but committee members were concerned about funding scholarships for high school freshmen who may struggle with college courses.

Lawmakers from the House and Senate also approved a bill to give in-state tuition to dependents of disabled veterans and to allow students to use state scholarship funds to enroll in summer classes.

A bill to set aside $2 million in lottery scholarship funds for trade and technical schools was pulled from Wednesday's hearing, with lawmakers saying they will consider the bill at a later date, which would require an amendment to the state's constitution.

Rep. Brian Evans, chair of the House Education Committee, said lawmakers will take up the bill again after the General Assembly returns from spring break March 27.

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