LITTLE ROCK — A state legislator says he plans to file a bill that would require students who receive lottery-funded scholarships to repay the state if they fail to obtain a degree.
The interim director of the Arkansas Department of Higher Education says the proposal may conflict with the constitutional amendment that allowed the lottery’s creation.
According to a draft of the bill that Rep. Nate Bell, R-Mena, released Wednesday via Twitter, the measure would make recipients of the Academic Challenge Scholarship liable to the Higher Education Department for all awards they received under the program if they cease to be enrolled at an institution of higher education without obtaining a degree or a certificate from a qualified certificate program.
ADHE could waive repayment if a student’s failure to stay enrolled is the result of the death of the student or an immediate family member; a health condition of the student or an immediate family member that is life-threatening or requires hospitalization or home-based care; loss of employment; a leave of absence; or any other cause approved by ADHE.
"My goal here is not to burden students who intend to get a degree or who have a legitimate reason for why they’re not continuing their education," Bell said Wednesday. "I just simply want to ask every student, who taxpayers invest money in their education, to ensure to those same taxpayers that they’re serious about getting that education completed and they will continue their education — and that if they don’t, they understand that there is a cost that comes along with that."
The current retention rate among Academic Challenge Scholarship recipients is below 50 percent, according to ADHE.
The money that students repay would be used to fund scholarships for non-traditional students. The state currently caps spending on nontraditional students at $12 million per year, but Bell’s proposal would change the cap to $12 million plus whatever is available in recovered scholarship money.
"I’m passionate about seeing our non-traditional students funded better," Bell said.
Interim ADHE Director Shane Broadway said higher education officials looked into Bell’s idea when he first floated it during a previous session. He said they questioned, then and now, whether it would be legal.
"The constitutional amendment establishing the lottery calls the scholarships ‘scholarships or grants,’ and what he is discussing would be a loan," Broadway said.
The draft bill would allow the state to recover the money from a student through an offset of the student’s state tax refund. Broadway said he did not know how successful that method would be in recovering scholarship money.
"With the programs we have currently, we have not had great success in being able to collect" on defaulted student loans, he said.
Legislators have been looking for ways to cut the scholarship program’s costs, which ADHE says will exceed revenue and exhaust a $20 million reserve in about three years if no action is taken. The legislative oversight committee on the lottery voted Tuesday to recommend that scholarship amounts be lowered from $4,500 to $3,300 per year at four-year schools and from $2,500 to $1,650 per year at two-year schools starting in the 2013-14 school year. The change would only affect new students entering the program.
Sen. Johnny Key, R-Mountain Home, co-chairman of the lottery oversight committee, said Wednesday he also questioned whether Bell’s proposal would be legal and how successful it would be at recovering money.
"Members are concerned about how much of the scholarship money is being lost by folks who start and then don’t finish," Key said. "I’m not sure that repayment is the right way to go, but it’s something we can sure talk about."
The Legislature convenes for the 2013 regular session on Jan. 14.