It’s no secret that the state is in the middle of a terrible fiscal crisis and that problems just got much worse with recent flooding. Because of the devastation caused by this natural disaster, state lawmakers now face even tougher financial decisions in the upcoming session, including the future of the TOPS college scholarship program.
Fortunately, lawmakers can improve TOPS in ways that would save money, increase the program’s economic benefits, and help disadvantaged students all at the same time.
The original idea for TOPS was a good one. The “T” in TOPS stands for Pat Taylor, whose tremendous generosity provided college scholarships for high-achieving, low-income students. TOPS scholarships have made all the difference for families living near or below the poverty line, as even in-state tuition can be unaffordable.
Over time, the state used TOPS scholarships to achieve additional goals: avoiding a “brain drain” and boosting Louisiana’s economy. To do that, lawmakers opened TOPS eligibility to students from all economic backgrounds. This change greatly increased the cost of the program and also undermined the program’s goals. TOPS scholarships are now primarily awarded to students from middle- and high-income families who were not originally eligible for the Taylor program. Almost all of these students would likely go to college regardless of TOPS funding.
As it stands today, the fiscal cost of TOPS is five times greater than the benefit. Here is the economic math behind the problem. Each high-achieving student that TOPS keeps in Louisiana will pay roughly $150,000 in taxes over his or her lifetime. There may also be some “spin-off” benefit if any students start new businesses, for example. In contrast to these potential benefits, the average cost of TOPS is much lower — only $23,000 per student. This sounds like a great deal until we consider hidden costs.
The main problem is that TOPS probably has a minimal effect on whether students stay in Louisiana in the long run. The vast majority of students who choose to stay would likely remain in state regardless of TOPS to be near their families and take advantage of all that Louisiana has to offer. Other TOPS students attend college in state to benefit from the scholarship but leave afterward.
Evidence from other states suggests that only three of every 100 TOPS scholars will end up living and working in Louisiana. So, instead of the projected $150,000, the expected future tax revenue is only about $4,500 per TOPS recipient —far less than the $23,000 in costs. The situation looks even grimmer when we consider that these costs arise now, while the small benefits accrue over a period of 20-30 years.
Fortunately, there is a simple solution that has gotten lost in the chaos of the larger budget crisis. If we take TOPS back to its roots by awarding these scholarships to low-income students, we can save money and help those who need it most. For example, if we adjust scholarship levels on a sliding scale by income, giving full TOPS funding to students from families with incomes below $50,000 year and gradually smaller TOPS scholarships to higher-income families, the state would save at least $100 million a year. This approach would also target spending where it will do the most good. For low-income students, TOPs scholarships really will increase their chances of getting a degree, which will pay dividends for the whole state in the long run. As Louisiana emerges from this fiscal crisis, the saved funds could then be reinvested in colleges and universities to help offset the past decade’s massive cuts to higher education.
Let me also make this personal. If my own daughter stays on her current course, she will be eligible for a TOPS scholarship, but I think these funds could be put to much better use if they went to students who really need them.
The solution here is simple: give larger TOPS scholarships to low-income families. This would not only save the TOPS program but also help low-income students and increase the economic benefits of the program all at once.
In this time of crisis, we should take the easy wins when we can get them.