State seeks to overhaul Frank O’Bannon scholarships to urge faster college completion

By Tim Grimes
TheStatehouseFile.com

INDIANAPOLIS – State higher education officials are proposing changes to the Frank O’Bannon scholarship program that will encourage thousands of students to earn higher grades and complete college faster.

The plan – which will be introduced as a bill by Rep. Tom Dermody, R-LaPorte – is meant to simplify and change the priorities of the equation that determines individual scholarship amounts. Advocates say the changes should lead to more students earning degrees at lower costs to the state.

“We need to increase and incentivize kids to get through hindrances to get through college and graduate and incentivize them to get through college in four years,” Dermody said.

He said the state needs to “make sure we’re just not allowing kids to go and have no degree at the end of the line.”

Last year, 71,934 earned Frank O’Bannon scholarships, which are named for a former Democratic governor.

Students now receive a base amount that is determined by student need and college costs. Currently, students can get a 20 percent bonus if they earned a high school academic or technical honors degree or an associate’s degree. The scholarship amount remains the same through college as long as the student maintains a minimum grade point average, which fluctuates between 2.25 and 2.5.

The proposed model keeps the base scholarship that takes into consideration need and cost factors, although it changes the calculation. There would also still be a bonus for earning a technical or academic high school honors degree – but it would be applied only for the student’s freshman year in college.

Under the proposal, students would maintain their scholarships if they kept GPAs of 2.0 or higher and they were on track to graduate, meaning they were earning at least 30 credits annually.

Students could earn bonus scholarship money if they maintained GPAs of 3.0 or higher or were on track to graduate early, meaning they earned at least 39 credits in a year. Students can also receive a bonus by earning an associate’s degree before enrolling in a four-year program.

The proposal – made by the Commission for Higher Education – is in line with recent moves state leaders have made to encourage on-time graduations.

Gov. Mitch Daniels pushed a “credit creep” bill into law earlier this year, which is meant to limit the number of classes students need to graduate. Gov.-elect Mike Pence has also called for rewarding students that graduate early or on time and rewarding colleges and universities that increase on-time degree completion.

“We’re paying for what we value, which is completing in four years, getting good grades and working on an accelerated track,” said Mary Jane Michalak, associate commissioner for student financial aid at the higher education commission.

Higher education officials have calculated the impact of their proposal on student scholarships based on several scenarios.

In one – which the commission has labeled Slow Sally, a reference to her completion rate – the student graduates from high school with a basic Core 40 diploma, maintains a 2.5 grade point average in college and attends a public university. The state determines she or her parents can contribute $2,000 annually to her tuition.

She completes a four-year degree in five years by taking an average of 12 credit hours per semester.

The current formula would give Slow Sally $1,130 per year toward her tuition for four years – although she would have received nothing in her fifth year.

Under the proposed plan, Sally would not be eligible for aid after her freshman year because she did not complete 30 credit hours. However, if she got back on track, she would be eligible for future aid.

In another example – this one labeled Basic Barney – the student also graduates with a Core 40 diploma, keeps a 2.0 grade point average in college, and attends a public university. The state also determines that Barney or his parents can contribute $2,000 annually toward his tuition.

He completes a four-year degree in four years. But under the current system, Barney only received a scholarship his freshman year. He loses it later because he fell below the current GPA requirements.

Under the proposed system, though, Basic Barney would receive a $1,100 grant in each of his four years. He wouldn’t receive any incentives – because he didn’t earn a higher GPA or take 39 credit hours per year – but he wouldn’t lose his scholarship either.

Overall, the commission’s proposal would lessen total funding for base scholarships but increase the dollars used for incentives. Currently, the state spends nearly $162 million annually on the Frank O’Bannon scholarships. If the proposed plan was implemented today, the state would spend about $38 million less.

But the overall awards could increase if students react to the incentives.

Dermody said the changes are good for taxpayers, students and the state.

When you’re spending public money, “there has to be some accountability,” Dermody said. “There’s not a free ride and we need to make sure when we’re spending these dollars to get the best return and that’s having kids graduate college in four years.”

Tim Grimes is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.