New Jersey’s public four-year colleges spend more than $110 million per year on scholarships and grants to keep top students in the state.

But increasingly, the money to fund those scholarships is coming out of the pockets of less academically talented students, who subsidize those funds through increased tuition and fees.

College officials say that lacking adequate state and private funding, they must use their own funds to compete with private out-of-state schools that offer top students substantial awards.

Students say it’s working. But not everyone agrees it’s the most equitable use of college funds.

Sarah Neuner graduated fourth in her class this year at Holy Spirit High School. Her first choice, the University of Delaware, offered her $12,000 per year, about half of what it would cost to attend. Her father discovered that her SAT scores and class rank qualified her for an $18,000 Presidential Scholarship at the Richard Stockton College of New Jersey, which would cover tuition, fees and housing.

She applied, received the scholarship and decided that staying closer to her Atlantic City home wasn’t so bad after all if she could attend college practically for free.

“(The scholarship) was the deciding factor,” said Neuner, who plans to be a veterinarian and still has years of graduate-school costs to consider. “None of the other colleges were giving me enough.”

That pattern is repeated across the state in what college officials say is their effort to stop the “brain drain” of top students leaving the state.

But experts say if the result is draining the wallets of other students, it should be questioned. Public college tuition in New Jersey already is among the highest in the nation.

“They are trying to attract top students by giving price discounts,” said Daniel Bennett, executive director of the Center on College Affordability. “But it is being subsidized by the less academically talented. There is a lot of debate on this issue.”

Stockton budgeted $9.2 million for financial aid scholarships and grants this year, more than triple the amount offered just two years ago. These funds are separate from college foundation funds, which are privately raised and are currently being primarily invested, not spent, in an effort to grow the college endowment.

Businessman Peter Caporilli, a Stockton graduate and longtime Stockton Foundation board member, said he strongly supports more merit aid for students. But he believes more of the money should come from private donors, and the college funds should be more publicly disclosed.

“I absolutely think it’s a positive to reward high-performing students,” he said. “But it does upset me that people don’t realize it is being subsidized by tuition.”

Stockton’s awards account for 8 percent of the college’s current operating budget and 21 percent of the $43 million generated by undergraduate tuition, or $1,350 per student.

Forty-one percent of the record freshmen class of 878 students is getting scholarship or grant funds. The average SAT score of “regular admit” freshmen this year is 1,143, up from 1,105 two years ago, according to the college’s fall enrollment summary.

Mark Kantrowitz, publisher of, a financial aid Web site, said merit-based aid has been increasing more than need-based funds nationally. But, he said, public colleges also should be concerned about helping low-income students who might not otherwise attend at all.

“More merit aid is valid if they are also meeting the need of the need-based students,” he said. “Otherwise they are not really meeting their mission.”

The College Board’s 2009 Trends in College Aid noted that while low-income students at public colleges nationwide got the most aid from all sources, families making $100,000 or more got more aid directly from the colleges, an average of $730 compared with $570 for low-income students.

College officials interviewed said some of their aid is need-based, and some of the merit aid also goes to needy students. They note that programs such as NJSTARS have also expanded options for talented students. To some extent NJSTARS has actually put financial pressure on the public four-year colleges to compete with the free community college scholarships offered to the top 15 percent of high school graduates each year.

Making an investment

All of the state’s residential public colleges provide some institutional scholarships and grants. For colleges looking to boost or maintain a reputation for high academic standards, there is no better incentive than money.

“If they can recruit better students, they can move up a couple of spots in the U.S. News rankings,” said Andrew Gillen, researcher director at the Center for College Affordability and Productivity. “They can raise tuition $200, and give more scholarships.”

Rutgers provided $66.6 million in scholarships and grants last year, and has allocated $63.3 million so far this year. Ramapo College has budgeted $6.9 million, Rowan University $5.3 million and the College of New Jersey $14.2 million. College foundations provide additional funds.

In 2007-08, the most recent year available for statewide data, the 10 residential public colleges provided $110 million in scholarships and grants according to date filed with the New Jersey Commission on Higher Education.

“We are trying to keep the best and brightest in New Jersey,” said Lisa Angeloni, dean of admissions at the College of New Jersey in Trenton. “And to attract them we have to support them with money.”

Stockton President Herman J. Saatkamp Jr. calls the funds an investment in New Jersey’s future.

He said some scholarship recipients are from economically challenged families, and in today’s economic climate, even middle-class families are struggling and reluctant or unable to borrow funds. If scholarships help those students attend college, graduate and get good jobs, they help the local economy.

Sarah’s father, Scott Neuner, said with another daughter in high school and veterinary school in Sarah’s future, the family was looking to save wherever they could. Sarah’s grades and SAT made her eligible for scholarships at other colleges, but the family would still have spent at least $10,000 per year.

Stockton offers several levels of scholarships. The $18,000 Presidential Scholarship is offered to students in the top 5 percent of their high school graduation class who have at least a 1,400 on the SAT math and verbal scores combined. There are also $11,000 provost’s scholarships, $7,000 dean’s scholarships and $2,000 minimum Stockton scholarships for students with good academic records. This year, 354 freshmen receive one of those scholarships, including nine Presidential Scholars, one of whom is not from New Jersey, according to college data.

Sarah Neuner retook the SAT to bump her score over 1400.

“She had a 1380,” her father said. “That extra 20 points was worth thousands of dollars.”

College officials say the trend toward more merit aid is directly related to the state’s cutback in funds for talented students. New Jersey is one of the top-rated states for providing need-based aid, offering $332 million this year in Tuition Aid Grants for low-income students, who are also eligible for federal Pell grants of as much as $5,350.

But the state budget crisis eliminated the Outstanding Student Recruitment Program, which provided scholarships to top-ranked students who stayed in-state. The remaining Bloustein scholarship provides a maximum $1,000 per year.

“There is almost nothing from the state to keep them here, so it is up to the institutions to decide what to do,” Angeloni said.

According to TCNJ data, 80 percent of students who are accepted but do not attend leave the state for colleges such as New York University, Villanova and Boston College. Angeloni said the public colleges are now acting more like the private schools in providing the scholarship incentives top students expect, and it’s working.

This year, 90 Rutgers freshmen were named Presidential Scholars, up from 50 two years ago.

One of them is Tyler Davenport, the 2009 valedictorian at Cumberland Regional High School.

Rutgers was Davenport’s “safe school.” But of the six colleges where he applied, none compared to Rutgers’ offer of free tuition, fees, room and board for four years, plus special academic research opportunities, as long as he maintains a 3.0 grade point average.

“No one else was even close,” Davenport said, noting that some private colleges offered him more money than the $21,000 Rutgers award, but still cost much more to attend.

The biomedical engineering major now says he is already planning to attend graduate school. And he is thrilled with the engineering program at Rutgers, admitting he was a bit concerned that it would not be challenging.

Building a reputation

Overcoming the stigma that state colleges are not as prestigious or challenging as out-of-state schools is one reason New Jersey public colleges are willing to pay for the best. TCNJ is the top-ranked public college in the Northeast in the U.S. News and World Report annual ranking. Angeloni said that’s no accident.

“Reputation is important,” she said. “Top students want to go to a school that has other good students.”

TCNJ spent years managing its enrollment to become more selective and has now begun cutting back a bit on merit scholarships.

“We want students to come here because they want to, not just for the money,” she said explaining why the college does not pay all costs.

Courtney McAnuff, vice president for enrollment management at Rutgers said the Presidential Scholars program is attracting more middle- and upper-income students who in the past would have left the state. The economy may be playing a role, but it’s also an opportunity for the college to show it can compete academically.

“It’s not just about the money, but also the opportunity to do research with our faculty,” he said of the scholars program.

It bothers him when students consider it more prestigious to go to a public college in another state, such as Penn State, Delaware or Virginia, where they will have to pay much more than at Rutgers.

“In New Jersey, it’s like a point of pride to go away to college,” he said. “But you have to also look at the financial side.”

That’s what Kara Dods, of Linwood, did. The Mainland Regional High School 2009 class salutatorian really wanted to go to the University of Virginia.

“It was my first choice,” she said. “But it was also expensive because they don’t really do out-of-state scholarships.”

So she became a Presidential Scholar at Rutgers where she is majoring in biochemistry and biotechnology and wants to go on to medical school. With a free ride at Rutgers, her parents can now help with medical school costs.

“It really is pretty much the same as a private college,” she said of Rutgers. “I came in expecting to challenge myself, and I am.”

Finding other funding

College officials admit they cannot use their budgets to subsidize scholarship costs indefinitely.

“We do have to find new ways to generate revenue,” McAnuff said, noting that out-of-state and international students, who pay higher tuitions, pick up some of the extra costs. “We have to look at how much we can raise, and how much we can afford to discount.”

Like private colleges, the public schools are doing more fundraising and turning to their nonprofit foundations to generate scholarships. Rowan’s foundation, helped by the $100 million endowment from Henry Rowan and a successful capital campaign, will contribute $1.8 million in scholarship funds this year.

Angeloni said TCNJ’s foundation helps support need-based scholarships, which include subsidizing low-income students in the Educational Opportunity Fund program, or EOF, to help them graduate with no debt. The cost is about $1.2 million this year.

Stockton is building its endowment by using its operating budget to replace the scholarship funds formerly generated by fundraising. For the last few years, revenue from the annual gala and golf tournament have been invested, helping build the Stockton Foundation endowment to $8.8 million this year. Saatkamp said by 2011 he hopes to begin tapping the foundation again for both merit and need-based aid.

He said he also has donors specifically interested in middle-class students who are just a little too wealthy for need-based aid and not ranked quite highly enough for the big merit scholarships — the ones who just pay for everything.

“There are those who want to help the middle class,” he said. “We hope to get endowments for that group as well.”

Caporilli said college foundations and development offices have to do more to build community support for scholarships, both to keep tuition affordable and send a message to top students that if they stay in state, their hard work will be rewarded.

Bennett said the issue deserves public debate, especially if public money is being used to subsidize merit scholarships.

“It doesn’t help make the college more affordable,” he said. “And it is a squeeze on the middle class who make too much for need-based aid, but don’t have the high academics to get the merit scholarships.”

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