Fact Sheet: Need-Based Financial Aid Dollars Being Diverted to General Fund
February 23, 2016
For years millions of scholarship dollars have been diverted away from Kentucky’s need-based financial aid programs to the General Fund.
Studies have shown that need-based financial aid:
• Increases college enrollment among low- and moderate-income students.
• Increases college persistence and the number of credits earned.
Kentucky has two need-based financial aid programs funded by the lottery. According to state law, lottery funding should be split 3 ways:
• Literacy programs receive $3 million off the top.
• The merit-based scholarship, the Kentucky Educational Excellence Scholarship (KEES), receives the next 45 percent.
• The need-based scholarships, College Access Program (CAP) and the Kentucky Tuition Grant (KTG), receive the remaining 55 percent to be allocated between them.
In 2015 the Lottery Corporation gave the state $221.5 million (this does not include unclaimed prize money). If the money had been used as originally intended:
• $3 million would have gone to literacy programs (which it did);
• $98.3 million would have gone to the merit-based scholarship Kentucky Educational Excellence Scholarship (KEES actually got $101 million from these funds, plus an extra $8.6 million in unclaimed prize money);
• And the need-based CAP & KTG scholarships should have received $120.1 million (CAP & KTG actually got $92.1 million).
Combined, CAP & KTG were shorted by $28.1 million, which is equal to over 15,000 fewer students having access to money for college. If enacted, the proposed 2016-2018 budget would use $35.3 million in 2017 and $38 million in 2018 intended for CAP & KTG to fund other priorities. This would be more than has ever been diverted from need-based scholarships before.
In 2015, 95,018 Kentuckians were deemed eligible for CAP funding based on their Free Application for Federal Student Aid (FAFSA).
• However, just 38,587 were awarded the scholarship due to a lack of funds. Meaning 3 out of every 5 CAP eligible students were turned away.
• 1 out of every 3 KTG eligible students was turned away for the same reason.
Lottery Funds Diverted from CAP & KTG
Source: KCEP analysis of Kentucky Office of the State Budget Director and KHEAA data.