LIFE grants face possible cutbacks

COLUMBIA -- South Carolina college freshmen receiving $5,000 LIFE scholarships this fall could see their lottery-funded grants reduced before they graduate if demand for the awards continues to grow.

Competition from the new N.C. lottery and waning interest in the S.C. lottery are causing its profits to decline. Meanwhile, interest in the wildly popular college scholarships keeps surging.

As a result, legislative leaders are talking about capping the program, which would reduce the amount of individual grants from the current $5,000.

That's already happened in Georgia, where tougher guidelines have cost 18,000 students their scholarships.

Lottery profits were $273 million in the year ending June 30, down from a peak of $320 million in 2005-2006.

Meanwhile, the cost of the college scholarship program is expected to grow by at least $10 million a year over the next three years.

Lottery profits pay for most of the scholarships, which totaled an estimated $245 million last year. However, $50 million from the state's general fund also was needed to pay for LIFE scholarships. The taxpayer share of the LIFE program is projected to rise to more than $80 million for the year that just began.

"The decline in revenue was predictable," Senate Finance Committee chairman Hugh Leatherman said. "After three to five years, every lottery experiences a decline in revenue."

Today, any S.C. student who qualifies for the LIFE scholarship receives the $5,000-a-year grant. However, Leatherman said the most likely way to control the future cost of the scholarship program would be to cut that amount. That could be done by capping the total amount to be paid out in state-financed scholarships and then dividing that money by the number of students who qualify.

If the number of students qualifying continues to grow, the amount of the individual grants would decline.

But state Sen. Larry Martin, R-Pickens, said lawmakers should honor the commitment they made to give more S.C. students a chance to get a higher education.

"We made an obligation to those scholarships, and that obligation was heightened when we allowed tuition to rise during the 2002-2004 economic downturn," Martin said.

Lottery profits pay for several education programs, including the $30 million-a-year endowed chairs program that helps S.C. universities recruit nationally recognized research professors. But a large portion of the lottery's profits go to pay for LIFE, Palmetto Fellow, HOPE and other tuition grants.

USC President Andrew Sorensen said he hopes the General Assembly will not reduce the amount of LIFE, Palmetto and other state scholarships. He cited Clemson University research that showed 60 percent of S.C. students with SAT scores higher than 1390 now stay in state to attend college, compared with 17 percent before the start of the scholarships.

If the scholarships are reduced, Sorensen said, "as surely as night follows day, we will become less competitive for these students."

State Sen. Lewis Vaughn, R-Taylors, said he shares Leatherman's concern about future funding.

"Eventually the crunch is going to hit," Vaughn said. "But we must come up with ways to finance education for our kids."

"When people don't get their scholarships, I get a lot of calls," Vaughn said. "It's a very popular program."