For eight states, fewer lottery ticket sales means scholarship crunch

Low funding levels may mean big increases in students' out-of-pocket expenses

New consumer habits that don't include buying lottery tickets are hurting scholarship programs in eight states and leading local legislators to consider major cuts, the Associated Press reports. 

Eight states use lottery revenue to fund higher education scholarships, while more than 24 designate the funds for general education purposes. But falling ticket sales and rising tuition prices mean there's less money to go around. 

Strategic allocation of endowed scholarships

In New Mexico, the lottery program pays about 90% of tuition for eligible students: those who maintain a 2.5 GPA and those who complete no less than 15 credit hours per semester at a four-year institution. Nearly half of first-time, full-time students at the University of New Mexico (UNM) receive scholarships from the lottery program.

Lottery ticket sale revenue has flattened off at approximately $40 million per year in the state, while eligible students' tuition costs are estimated to hit about $65 million annually.

If more money isn't found, UNM students will likely have to pay about $1,700 more each year out of their own pockets, says Terry Babbitt, an associate VP at the institution.

Lawmakers are considering raising the eligibility bar or reducing the amount of aid awarded.

Tennessee, Georgia, Arkansas, Kentucky, South Carolina, and West Virginia are all facing similar drops in lottery ticket sales.

To address the issue, Tennessee established an endowment to fund scholarships via earnings and interest, a move experts say may provide short-term relief, while Georgia enacted changes in 2011 that led to 25% fewer students qualifying for its program (AP/New York Times, 3/2). 

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