Gabriela Campos / The New Mexican
A group of students walk towards the Student Union Building at the University of New Mexico campus in Albuquerque.
A new report on the economic effects of escalating costs to attend New Mexico colleges and universities calls for more financial assistance for low-income students and recommends an income cap on eligibility for the state’s flagship student aid program, the Legislative Lottery Scholarship.
“Our state workforces are very underdeveloped,” said Armelle Casau, a policy analyst who authored the report, released last week by the nonprofit advocacy group New Mexico Voices for Children.
A more skilled workforce would strengthen the state’s economy, the organization argues, and in turn would help lower poverty rates that remain among the worst in the nation.
But too few low-income New Mexicans are enrolled in higher education, the report says, estimating 22 percent of students are from low-income families, compared to a national average of 34 percent.
Meanwhile, the report says, needs-based college aid makes up less than a third of the state funds available. It lists the lottery scholarship, with a requirement of a 2.5 GPA, as a merit-based program.
In contrast, the report says, 25 other states ensure 95 percent of state-funded college aid is distributed based on financial need.
The Voices for Children report comes as state lawmakers consider measures to increase aid for low-income students. At least one of the bills — state Rep. Debra Sariñana’s House Bill 146 — would alter the eligibility rules for the popular lottery scholarship program to reserve its limited funds for those who most need the help. The money comes from a portion of revenues from New Mexico Lottery ticket sales.
HB 146 hasn’t yet been heard in its first committee. It’s likely to meet opposition, even from advocates of the program who have pushed for years for more scholarship funds to overcome a multimillion-dollar supply-and-demand gap.
“We’ve been debating this back and forth for years,” said state Sen. Mimi Stewart, D-Albuquerque, a retired educator. “I’ve always agreed that if we have to change it, making it more needs-based would be the way to go.”
But, Stewart said, she’d rather see a funding solution that benefits all students who qualify — C-plus or better graduates from New Mexico high schools who enroll full time in an in-state college within 16 months of graduating.
Last week’s report also comes as colleges and universities across New Mexico wrangle with enrollment declines — some so steep they have taken school officials by surprise. The state’s largest school, the University of New Mexico, saw a 7 percent drop in students between fall 2017 and fall 2018; most shocking was the 18 percent decrease in freshmen. Just over 24,000 students are enrolled at UNM this year, 3,500 fewer than five years ago.
Many schools have responded to the loss in tuition revenue — along with state funding cuts — by raising rates, placing a greater burden on students who stick around.
Despite the tuition increases, New Mexico colleges have been touted as some of the best deals in the nation.
In 2017, Texas-based Student Loan Hero ranked New Mexico the No. 1 state when it comes to affordable tuition and No. 2 for the rate of return on a college education, which means a degree pays off in higher wages.
For more than 20 years, the popular lottery scholarship has sweetened the deal, easing costs for more than 100,000 students in that time.
Still, Casau said, “Colleges are unaffordable for New Mexicans of limited means.”
Part of the problem is that the lottery scholarship program has struggled to remain solvent.
Initially, the program covered all of a recipient’s tuition and fees. As lottery ticket sales declined over the years, and both tuition rates and demand for scholarships increased, the amount of coverage began to drop, first to 95 percent of students’ costs five years ago, then to 90 percent and then to 60 percent in 2017-18.
A bill approved last year set flat fees for lottery scholarship recipients — $1,500 per semester for those who attend four-year research schools such as the University of New Mexico.
That amount would have covered about 41 percent of tuition and fees this school year.
However, the state Higher Education Department announced in May that an unexpected decrease in applicants — a drop of about 2,400 — created a nearly $4 million surplus in the program that allowed the agency to boost allotments. For a UNM student, the $800-per-semester increase brought tuition coverage to about 63 percent.
That still leaves hefty out-of-pocket costs for the poorest students, argue Casau and others at Voices for Children. And the scholarship doesn’t pay for food, housing or books.
Because it’s limited to recent high school graduates, Casau added, the lottery scholarship also doesn’t accommodate a changing demographic: Increasingly, those enrolled in New Mexico colleges have been out of high school for years, are working and have children. Many can only attend part time.
Two identical bills in the state House and Senate, HB 127 and SB 81, would increase a more flexible financial aid fund, to $3 million from $2 million, and would raise the amount an eligible student could receive each semester, to $1,500 from $1,000.
But Casau said more needs to be done.
Her report cites the lottery scholarship as a solution. It recommends restricting eligibility to students from families with incomes under $100,000 per year and creating a sliding scale for upper-middle-income students. That would leave more of the $40 million fund available to provide full tuition for low-income students.
The measure introduced by Sariñana, D-Albuquerque, would be a first step toward that goal, tying eligibility to a federal financial aid formula. Sariñana did not return messages seeking comment on the bill.
A legislative analysis of a similar measure Sariñana introduced in 2017 raises some concerns about the effect such restrictions might have on already dwindling enrollment numbers at state colleges.
The leaders of two nonprofit policy organizations that have weighed in on the lottery scholarship debate over the years said their groups would not get behind a needs-based eligibility change.
Fred Nathan, executive director of Think New Mexico, which has lobbied for a decade to increase revenues for the scholarship fund, said his group doesn’t have a position on the proposed restrictions.
Rio Grande Foundation President Paul Gessing, whose organization also has proposed scholarship reforms, said more definitively that he wouldn’t support the measure.
“We’re not necessarily on board with needs-based” college aid, he said.
Financial need shouldn’t determine who goes to college, Gessing said. “People should go to school if they can compete with other students.”