A proposed state scholarship program would revamp NJSTARS, increasing the number of eligible students and the money they would receive to attend college in New Jersey.
But the plan could face the same funding problems that ultimately led to cutbacks in the program it would replace.
The new NJ HonorScholars Program would cover tuition costs for high school graduates in the top 20 percent of their classes who attend a two-year community college.
It also would give students in the top 10 percent the option to instead get a $4,000 annual scholarship to a public or private four-year college within the state.
The plan was approved in the state Senate last week by a 37-0 vote and is now in the Assembly Education Committee.
The new program was welcomed by high school, county and state college officials, who said it will help make college more affordable and keep residents in New Jersey.
Tobi Oves, the college and career coordinator at Ocean City High School, said finances have been more critical to families reviewing college options in the past several years.
“Based on what I’ve seen, this is a great time to introduce this,” she said.
College officials agreed.
“We want them to have that extra incentive to stay in-state,” said Stockton University President Harvey Kesselman. “It’s an investment in the young people of New Jersey.”
Atlantic Cape Community College Dean of Enrollment Management Andre Richburg said it also will give more students the opportunity to attend college.
But the Legislature will have to allocate more funding for the new program, which could make it difficult to sustain and lead to the same cuts that stifled NJSTARS.
Signed into law in 2004, the NJSTARS program originally guaranteed the cost of tuition and fees to all students who graduated in the top 20 percent of their high school class. A later bill extended the scholarships to students who continued at a four-year college.
Eligible students also apply for federal Pell and state Tuition Aid grants, which, combined with promised matching funds from the colleges, provided eligible students with a free four-year college degree.
But when the recession hit in 2008, and more high school graduates began to take advantage of the program, the cost rose rapidly, from $4 million in 2005-06 to $18 million in 2008-09.
The Legislature responded over the next several years by cutting the eligibility back to the top 15 percent of graduates, reducing the NJSTARS II scholarships at four-year colleges to a maximum of $2,500 a year and reducing the community college awards to tuition only, and not fees.
By 2014-15 the number of students getting the scholarships had dropped by more than half, from more than 5,750 in 2008-09 to just 2,679. The cost was cut to about $7 million.
But in recent years, as the cost of college and the high rate of student debt got more attention, legislators again began looking for ways to make college more affordable.
The new program grew out of recommendations from the state College Affordability Task Force.
While New Jersey’s Tuition Aid Grant program is among the most generous financial-aid programs in the nation, providing more than $410 million in grants to low-income students this year, merit-based programs had been all but eliminated in budget cuts over the last several years.
The HonorScholar program would benefit more middle-class families who can’t qualify for the need-based grants like Pell or TAG, but still struggle to pay for college.
“Too many graduates are being saddled with excessive debt, which is holding many of them back from purchasing a home, starting a family and contributing to the state’s economy,” Sen. Sandra B. Cunningham, D-Hudson, said in a statement on the bill.
The bipartisan Legislation is co-sponsored by Cunningham; Senate President Steve Sweeney, D-Gloucester, Salem, Cumberland; Sen. Linda Greenstein, D-Middlesex, Mercer; and Sen. Robert Singer, R-Ocean, Monmouth.
The new program includes lessons learned from NJSTARS. Students cannot use the HonorScholars funds for remedial courses, an incentive to make sure they are ready for college when they graduate from high school.
But costs will rise. The state Office of Legislative Services reported there was not enough data to estimate the total cost of the four-year program. It did estimate the potential cost increase for the community college program at about $3 million.
But that estimate may be understated since it was based on current enrollment. In 2014-15, 2,679 students used the NJSTARS I and II scholarships. But at its peak in 2008-09, 5,753 students were in the program.
Since there are about 90,000 high school graduates in the state each year, the changes would make about 9,000 students eligible for the four-year college scholarships and 18,000 students eligible for the community college scholarships.
Supporters said the programs would help control college costs and revamp the state’s financial aid system to help more students.
Michael Klein, CEO of the New Jersey Association of State Colleges and Universities, said in an email: “One of the goals of NJASCU’s 2015-2018 strategic plan is: ‘Revise the state’s financial aid programs to meet student needs more equitably.’”
Jake Farbman, spokesman for the New Jersey Council of County Colleges, said its data indicate many of the students who used NJSTARS were in the 15 percent to 20 percent class rank, which was cut.
“Most of those students won’t get other scholarships,” he said. “It is an opportunity to save a lot of money, and it also makes a bachelor’s degree more affordable.”
New Jersey community colleges save students earning a bachelor’s degree the most tuition money in the nation, according to a study recently released by Student Loan Hero. The average savings by starting at community colleges is almost $21,000 for 60 credits.
Stockton’s Kesselman said the state spends billions each year on kindergarten through 12th-grade education, but then state funding drops off for higher education. He said the HonorScholar program gives students choice in where they go within the state while also encouraging them to stay in New Jersey.
“I think the yield will be impressive,” he said.