n Cap the amount the colleges must contribute.

n Limit the STARS II funds to just tuition, not fees.

n Set an income scale, or a needs assessment for families.

n Establish a task force to redefine the goals of the STARS program.

Assembly Higher Education Committee Chair Patrick Diegnan agreed Monday that changes are needed to the popular STARS scholarship program, just not this year.

Diegnan, D-Middlesex, said he will ask Gov. Jon S. Corzine this week to remove the proposed $100,000 family income cap for STARS eligibility from the proposed 2009 state budget.

After hearing from college officials and STARS recipients at a special hearing Monday, Diegnan said he felt it would be unfair to impose a new income cap on students who were counting on the scholarship and must make decisions this month about where they will attend college. The state budget won't be finalized until late June.

"Clearly we have issues," Diegnan said after hearing testimony from college officials and students. "But hopefully we can keep it in place this year."

Diegnan also recommended forming a committee to make recommendations on modifying the STARS program.

Of all the suggested modifications for the STARS program, state legislators seem the most in favor of tightening STARS academic requirements and capping how much four-year colleges must contribute for the STARS II students.

Corzine, however, has proposed capping income out of concern that the state would soon not be able to afford the program, this year budgeted at $13.8 million. An income cap would save $2.5 million because fewer students would be eligible.

Student Tuition Assistance Reward Scholarship, started in 2004, guarantees free tuition and fees at community college for the top 20 percent of all high school graduates in the state. Those who successfully complete their associate degrees with a 3.0 grade point average can transfer and get a STARS II at a four-year public college, in effect earning a free bachelor's degree.

Corzine's office said the governor has heard from many legislators and constituencies seeking to reverse proposed budget cuts.

"He is willing to entertain those proposals, with the understanding that it will require trading one cut for another," Corzine spokesman Jim Gardner said. "This remains a lean budget, which means doing more with less and in some instances doing less."

Jane Oates, executive director of the N.J. Commission on Higher Education, said she has gotten 40 or 50 calls from parents wanting to know what to do.

"What can I tell them besides wait and see?" she asked.

Diegnan said he also would recommend a committee be formed to look at how best to modify the program, which is very popular; but the increasing costs and high percentage of recipients who need remediation in college have generated concerns.

Assembly Higher Education Committee members were lukewarm about setting income limits on a merit scholarship, and concerned about the high rate of remediation.

Oates said 30 percent of this school year's STARS recipients needed at least one remedial course in college. She suggested that some students are not taking the most rigorous courses in high school for fear of dropping out of the top 20 percent of their class.

"If this is to be a merit program, then it must be based on merit," she said. "If we send students who are not ready to college we are sending the wrong message."

Assemblyman Richard Merkt, R-Morris, was surprised at the remediation percentage.

"That is a shocking statement about the level of preparation students are receiving in high school," he said. "College shouldn't be a cleanup act (for high school.)."

Oates said just 21 percent of the first group of 934 STARS recipients in 2004 graduated from a community college in two years, and 42 percent graduated in five semesters, the maximum allowed to receive the funds. She said the rest may have finished later, transferred to another college or dropped out, but the state does not have that data.

Rutgers University Vice President of Enrollment Management Courtney McAnuff said the state's financial aid funding process already has unintended consequences for needy and academically talented students at the four-year schools.

McAnuff said the top high school graduates admitted directly to Rutgers in fall 2007 had an average SAT score of 1372, but were eligible for a mere $961 Bloustein scholarship from the state. The STARS II transfer students had an average SAT of 1080, but got free tuition and fees worth almost $11,000 per year.

"That sends a very powerful message about keeping the best and the brightest here (in New Jersey)," he said.

Community college presidents also supported revisions to the program, but are opposed to an income limit. About 40 percent of current STARS recipients would be ineligible if the $100,000 limit were in place today.

"There may be other ways to save money and strengthen the program," Ocean County College President Jon Larson said. "But we have to do it in a way that does not harm those who have already planned to come."

Four STARS recipients said they work very hard to maintain their grades and are very appreciative of the funds.

John Neckonchuk, a student at Camden County College, said his parents earn more than $100,000 per year, but he also has two sisters in college.

"(STARS) is an incentive to do well in high school," he said.

The Associated Press contributed to this story

To e-mail Diane D'Amico at The Press:

DDamico@pressofac.com