Scholarships: when B's, not need, are enough: at least a dozen states offer merit scholarships to keep bright students from leaving. Should financial aid go to well-off families?

• Author: Winter, Greg
• Position: Education times

Kelly Ryan has made good use of her college trust fund. It has bought a trusty Honda, trips to Italy, Argentina, Switzerland, some painful lessons about picking her own stocks, and, if all goes well, maybe even her first piece of real estate after graduation. About the only thing it has not paid for is, well, college.

No need for that. Ryan is a scholarship student. "I didn't want to spend thousands of dollars every semester," says Ryan, 21, a senior at the University of Georgia, where a B average in high school and college earns a free ride, regardless of one's ability to pay.

Ryan's story, though not exactly ordinary, is familiar in Georgia. Campus veterans marvel at all the poolside apartments that have sprung up since the state removed the income cap from its merit scholarship awards. Some professors speculate that instead of increasing college enrollment, the state's $1.7 billion scholarship program has been a blessing for the automobile industry--since so many families roll the savings into buying cars.

"Yep, that was the big incentive," says Kristin McKenna, a senior who once set her sights far and wide for college, eyeing the distant, shiny coast of California, until her mother stepped forward with what is often called the "UGA exchange"--get the scholarship, get a car.

Though income is still a deciding factor in most other awards, particularly federal grants, states and universities are increasingly helping students who were once too well-off to qualify.

HELP FOR THE WEALTHY?

As a result, the percentage of students from families earning $100,000 or more who get state grants grew seven times faster than those earning less than $20,000 between 1992 and 2000, federal statistics show. A decade ago, less than 2 percent of the highest-income families got state grants. That figure surpassed 5 percent by 2000, even before many states started giving grants based solely on academic performance--regardless of family income.

The growth of the merit awards has fueled a national debate over the very meaning of scholarships, and who should get them. "It is inefficient--indeed, inequitable--to give public dollars to these kids when they would go to college anyway," says Donald E. Heller, an education professor at Pennsylvania State University.

Since Georgia instituted its merit scholarships in 1993, trying to slow the migration of students who ventured off to college and rarely returned, at least 11 states have followed its lead.

States are using...