Before Casie Kagalis registered for her classes this semester at the University of Maryland, the sophomore psychology major checked out www.terpunderground.com, a student-run Web site that rates classes on the College Park campus. Kagalis was looking for a section of Psychology 200 "where the professor didn't just expect you to read a book and understand," but would guide students through the work. After a shaky start to college, Kagalis had finished her freshman year with a solid 3.3 GPA. But she couldn't afford to let her grades slip. A lot more than pride was riding on keeping a B average: so was a $3,000 annual Hope Scholarship from the state.

"Trying to keep that 3.0 is always on my mind," says Kagalis, who is from Bowie. "If I lose Hope, I'm stuck with even more loans."

That focus on academic achievement is exactly what Maryland officials were aiming for when they started the Hope Scholarship in 1999. Maryland joined more than a dozen states, mostly in the South, in creating merit scholarships in the 1990s. The idea was born in Georgia in 1993: to promise full or partial tuition at in-state public colleges to students who earn a B average or better in high school and maintain it through college Hope Scholarship in 1999.

Maryland joined more than a dozen states, mostly in the South, in creating merit scholarships in the 1990s. The idea was born in Georgia in 1993: to promise full or partial tuition at in-state public colleges to students who maintain a B average or better.

The idea represented a dramatic and controversial shift in how states awarded student aid: from a system that limited assistance to needy students, to one that had little regard for income. State legislators and governors found they were able to ease middle-class angst over rising college costs, while keeping bright students from defecting to other states for college. "We spend millions of dollars to bring industries to the state, so there's no reason we shouldn't spend a few thousand dollars per student to keep them home," says West Virginia Gov. Bob Wise, who made merit scholarships a centerpiece of his campaign in 1999.

Despite their popularity with politicians and the public, the scholarship programs have their critics among college presidents and other higher education professionals. These critics say Hope scholarships are essentially a government handout to those who least need it, arguing that states are siphoning taxpayer dollars away from need-based aid to subsidize the education of students who would go to college anyway--and who, in some cases, can easily afford the price tag. At the same time, the critics question whether the merit awards have actually raised academic standards, or spawned a generation of students who try to game the system to earn a B.

"These scholarships might very well be an instance of good politics, but not good policy," says Gordon K. Davies, who for 20 years was director of the State Council of Higher Education for Virginia, where Gov. Mark R. Warner and his predecessor have been unsuccessful in their efforts to start a merit-scholarship program. "And once you have given the middle class an entitlement, it's never going to go away."

The awards are a boon to middle-class families. For one, research shows that academic achievement and income are closely linked, so students from higher- and middle-income families usually perform better in school than poorer students. In addition, middle-class families typically earn too much to qualify for need-based aid, but not quite enough to write a check for tuition. In most states with merit-scholarship programs, anyone who meets the academic requirements receives an award, regardless of income. Maryland restricts most Hope Scholarships to students from families who make less than $95,000 a year, about double the state's median household income of $53,000 in 2000 (and even so, the demand exceeds the supply of funds; awards are given on a first-come, first-served basis). The income cap, however, is lifted for two categories of the Hope award--the Maryland Teacher Scholarship and the Science and Technology Scholarship--designed to encourage students to prepare for careers in fields where the state says it faces critical shortages.

Maryland Del. Jean Cryor, a Republican from Montgomery County, who successfully led an effort last year to raise the income cap from $80,000 to $95,000, takes issue with critics who say that middle-class families do not have financial need. "Sometimes a parent will take a second job to help with college costs and that knocks them out of consideration for the award," says Cryor, who would like to see the income cap removed altogether. "These students are true assets to the state and we shouldn't let them get away."

Whether these students are worth keeping is still a matter of debate. About a third of the 1,500 Maryland students who received the Science and Technology Scholarship last academic year and remained in college this fall, lost the award after failing to maintain a B average. (Once lost, the scholarship isn't necessarily gone for good; a student can reapply for it if he improves grades.) The best performers were the 2,500 recipients of the Maryland Teacher Scholarship, which is worth $5,000 a year. Only 11 percent of them failed to make a B. About a quarter of Hope recipients in other academic majors lost the scholarship this year because of their grades. "We don't know why students can't keep the 3.0 in college, but it concerns us," says Janice Doyle, assistant secretary for finance policy at the Maryland Higher Education Commission. "Maybe a 3.0 is too high to ask of a first-year student. Maybe we need to cut them a break their first year. Maybe we need a sliding scale."

Why so many students lose the Hope Scholarship is unclear. Everyone, it seems, has a different explanation. Critics of merit awards blame it on grade inflation in high school. Professors say some students are ill-prepared for college-level work. Students say college is more difficult than high school and they face more distractions.

Kagalis, the University of Maryland student, says her freshman year at College Park turned out to be more difficult than she ever imagined. After graduating from Archbishop Spalding High School in Severn with a 3.78 GPA, she earned a 2.9 her first semester in college, putting her below the cutoff for the Hope Scholarship. She stopped playing in a club volleyball league. She stopped going out as often on Thursday nights. Getting her grades up became her top priority.

One way she did it was by paying more attention to her class schedule. Unlike some Hope recipients, she didn't drop challenging courses or take a lighter class load. But she says she did become less adventurous in picking courses. "I check out the workload on terpunderground or by talking with other students," Kagalis says. "I want to know what the tests are like. I want a teacher who is going to slow it down and stop to explain concepts."

Some Hope recipients at the University of Maryland say they have gone further, choosing their class sections only after finding out which professors give the most A's and B's. "There have been some classes that my friends have taken that I didn't want to take because they were too hard," says Krystal E. Borchers, a sophomore government and politics major from Silver Spring.

While most Hope recipients lose the scholarship because of grades, a few decide on their own that the program is not for them and voluntarily give it up. The reason is the scholarship's work requirement. Maryland's merit program differs from other states' in that it mandates that recipients work in the state after graduation, one year of work for every year they received the scholarship. If they don't, or if they leave before they complete the work requirement, they have to pay back the scholarship at the same interest rate as a federal student loan. For students on the College Park campus, that requirement may be especially limiting: A study released last year by the Southern Technology Council, an organization of state officials and business leaders, found that students who attend research-intensive universities, like the University of Maryland, are more likely to leave the state because they have better access to national employers through job fairs and their professors' contacts than do students at smaller colleges.

Crystal Novas, a sophomore business major at Maryland, received a Hope Scholarship last year, but dropped the award this year because she would like to pursue a career in fashion merchandising or international business, a line of work that is likely to take her to Manhattan. "When you think the center of business, you think New York, not Baltimore," Novas says. "I don't want to feel tied down to Maryland. The scholarship is a great thing, but they need to broaden it, even to D.C."

To some critics, the work requirement seems overly punitive. They say it limits student choice after graduation, especially in the current economy, where a weak job market may require students to look for work out of state. "In a highly mobile society, you can't compel these students to stay," says Travis J. Reindl, director of state policy analysis at the American Association of State Colleges and Universities, which represents about 400 public institutions. "People are going to go where the jobs are."

For now, the Maryland General Assembly seems unlikely to drop the work requirement, since it is a potential revenue source in a year where lawmakers face a projected $400 million budget deficit. Already, some 1,200 students are on a waiting list for a Hope Scholarship, after the legislature cut $5 million last spring from the budget that higher education officials had requested for the awards. Still, the state plans to spend $20.4 million on the scholarships this year, up more than 400 percent from just three years ago. By comparison, state appropriations on need-based financial aid rose only 16 percent, to $41 million, in the same time period. Even with the infusion of cash into merit aid, the program has not reached the level that Gov. Parris N. Glendening originally envisioned. "I want the word "tuition' to be seen as an anachronism," the governor said in his 2000 State of the State address. "Maryland's institutions of higher education will be among the best in the country . . . and they will be free."

Definitely words spoken in more prosperous times. In Virginia, where politicians are struggling to close a $2 billion budget shortfall, plans are on hold for a Hope-like scholarship that Warner proposed during last year's campaign. "In our current climate," says Peter Blake, the state's deputy secretary of education, "new initiatives are going to be difficult to fund when we're having trouble funding our existing programs."

That's fine for some college leaders in Virginia, who say the academic reputation of the state's public colleges, like the University of Virginia and the College of William and Mary, provide enough incentive to keep top students in the state. Indeed, merit scholarships could actually have the unintended consequence of lowering the quality of the state's colleges and universities by reducing the number of spaces available for top-notch out-of-state students, argues David W. Breneman, dean of the education school at the University of Virginia. "Just imagine if we provide free tuition to those in-state students we turn down. How many of them would be calling their legislators saying, "So you gave me a merit scholarship, but now I can't get into UVA,'?" Breneman says.

For Kagalis, the Hope scholarship was never a factor in her choosing to attend the University of Maryland. But now that she is on the hook to pay back at least two years of the scholarship, she is beginning to think about staying in the state after graduation. "The problem is, if I don't find a job or graduate school around here, I won't have enough money saved to pay that scholarship back," she says. "It really puts you in a bind. You don't want to turn down the scholarship, but you also don't want to give up a good job opportunity somewhere else. That's a tough choice to make."

Hope Scholarship in 1999. Maryland joined more than a dozen states, mostly in the South, in creating merit scholarships in the 1990s. The idea was born in Georgia in 1993: to promise full or partial tuition at in-state public colleges to students who earn a B average or better in high school and maintain it through college.

The idea represented a dramatic and controversial shift in how states awarded student aid, from a system that mostly limited assistance to needy students, to one that had little regard for income. State legislators and governors found they were able to ease middle-class angst over rising college costs, while keeping bright students from defecting to other states for college. "We spend millions of dollars to bring industries to the state, so there's no reason we shouldn't spend a few thousand dollars per student to keep them home," says West Virginia Gov. Robert E. Wise Jr., who made merit scholarships a centerpiece of his campaign in 1999.

Despite their popularity with politicians and the public, the scholarship programs have their critics among higher education professionals. These critics say the merit scholarships are

essentially a government handout to those who least need it, arguing that states are siphoning taxpayer dollars away from need-based aid to subsidize the education of students who would go to college anyway--and who, in some cases, can easily afford the price tag. At the same time, the critics question whether the merit awards have

actually raised academic standards, or spawned a generation of students who try to game the system to earn a B.

"These scholarships might very well be an instance of good politics, but not good policy," says Gordon Davies, who for 20 years was director of the State Council of Higher Education for Virginia, where Gov. Mark Warner and his predecessor have been unsuccessful in their efforts to start a merit-scholarship program. "And once you have given the middle class an entitlement, it's never going to go away."

The awards are a boon to middle-class families. For one thing, research shows that academic achievement and income are closely linked, so students from higher- and middle-income families usually perform better in school than poorer students. In addition, middle-class families typically earn too much to qualify for need-based aid, but not quite enough to write a check for full tuition. In most states with merit-scholarship programs, anyone who meets the academic requirements receives an award, regardless of income. Maryland restricts most Hope Scholarships to students from families who make up to $95,000 a year, about double the state's median household income of $53,000 in 2000 (and even so, the demand will likely exceed the supply of funds this year; awards are given on a first-come, first-served basis). The income cap, however, is lifted for two categories of the Hope award--the Maryland Teacher Scholarship and the Science and Technology Scholarship--designed to

encourage students to prepare for careers in fields where the state says it faces critical shortages.

Maryland Del. Jean Cryor, a Republican from Montgomery County, who successfully led an effort last year to raise the income cap from $80,000 to $95,000, takes issue with critics who say that middle-class families do not have financial need. "Sometimes a parent will take a second job to help with college costs and that knocks them out of consideration for the award," says Cryor, who would like to see the income cap removed altogether. "These students are true assets to the state, and we shouldn't let them get away."

Whether these students are worth paying to keep is still a matter of debate. About a third of the 1,500 Maryland students who received the Science and Technology Scholarship last aca-demic year, and remained in college this fall, lost the award after failing to maintain a B average. (Once lost, the scholarship isn't necessarily gone for good; a student can get it back if he improves his grades.) The best performers were the 2,500 recipients of the Maryland Teacher Scholarship, which is worth $5,000 a year. Only 11 percent of them failed to make a B average. Among the Hope recipients in other academic majors, about a quarter lost the scholarship this year because of their grades.

Why so many students lose the Hope Scholarship is unclear. Everyone, it seems, has a different explanation. Critics of merit awards blame it on grade inflation in high school. Professors say some students are ill-prepared for college-level work. Students say college is more difficult than high school and they face more distractions. "We don't know why students can't keep the 3.0 in college, but it concerns us," says Janice Doyle, assistant secretary for

finance policy at the Maryland Higher Education Commission. "Maybe a 3.0 is too high to ask of a first-year student. Maybe we need to cut them a break their first year. Maybe we need a sliding scale."

Kagalis, the University of Maryland student, says her freshman year at College Park turned out to be more difficult than she ever imagined. After graduating from Archbishop Spalding High School in Severn with a 3.78 GPA, she earned a 2.9 her first semester in college, putting her below the cutoff for the Hope Scholarship. She stopped playing in a club volleyball league. She stopped going out as often on Thursday nights. Getting her grades up became her top priority.

One way she did it was by paying more attention to her class schedule. Unlike some Hope recipients, she didn't drop challenging courses or take a lighter class load. But she says she did become less adventurous in picking courses. "I check out the workload on Terpunderground or by talking with other students," Kagalis says. "I want to know what the tests are like. I want a teacher who is going to slow it down and stop to explain concepts."

Some Hope recipients at the University of Maryland say they have gone further, choosing their class sections only after finding out which professors give the most A's and B's. "There have been some classes that my friends have taken that I didn't want to take because they were too hard," says Krystal Borchers, a sophomore government and politics major from Silver Spring.

While most Hope recipients lose the scholarship because of grades, a few decide on their own that the program is not for them and voluntarily give it up. The number one reason is the scholarship's work requirement. Maryland's merit program differs from most other states' in that it mandates that recipients work in the state after graduation, one year of work for every year they received the scholarship. If they don't, or if they leave before they complete the work requirement, they have to pay back the scholarship at the same interest rate as a federal student loan. For students on the College Park campus, that requirement may be especially limiting: A study released last year by the Southern Technology Council, an organization of state officials and business leaders, found that students who attend research-intensive universities, like the University of Maryland, are more likely to take jobs in other states because they have better access to national employers through job fairs and their professors' contacts than do students at smaller colleges.

Crystal Novas, a sophomore business major at Maryland, received a Hope Scholarship last year, but dropped the award this year because she would like to pursue a career in fashion merchandising or international business, a line of work that is likely to take her to Manhattan. "When you think the center of business, you think New York, not Baltimore," Novas says. "I don't want to feel tied down to Maryland. The scholarship is a great thing, but they need to broaden it, even to D.C."

To some critics, the work requirement seems overly restrictive. They say it limits student choice after graduation, especially in the current economy, where a weak job market may require students to look for work out of state. "In a highly mobile society, you can't compel these students to stay," says Travis Reindl, director of state policy analysis at the American Association of State Colleges and Universities, which represents about 400 public institutions. "People are going to go where the jobs are."

For now, the Maryland General Assembly seems unlikely to drop the work requirement, since students paying back their scholarships are a potential revenue source at a time when lawmakers face a projected $1.7 billion budget shortfall. Already, some 900 students in Maryland are on a waiting list for a Hope Scholarship, after the legislature cut $5 million last spring from the budget that higher education officials had requested for the awards. Still, the state plans to spend $20.4 million on the scholarships this year, up more than 400 percent from just three years ago. By comparison, state appropriations on need-based financial aid rose only 16 percent, to $41 million, in the same period. Even with the infusion of cash into merit aid, the program has not reached the level that Gov. Parris Glendening originally envisioned. "I want the word 'tuition' to be seen as an anachronism," the governor said in his 2000 State of the State address. "Maryland's institutions of higher education will be among the best in the country . . . and they will be free."

Definitely words spoken in more prosperous times. In Virginia, where politicians are struggling to close a $2 billion budget shortfall, plans are on hold for a Hope-like scholarship that Warner proposed during last year's campaign. "In our current climate," says Peter Blake, the state's deputy secretary of education, "new initiatives are going to be difficult to fund when we're having trouble funding our existing programs."

That's okay with some college leaders in Virginia, who say the academic reputation of the state's public colleges, like the University of Virginia and the College of William and Mary, provides enough incentive to keep top students in the state. Indeed, merit scholarships could actually have the unintended consequence of lowering the quality of the state's colleges and universities by reducing the number of spaces available for top-notch out-of-state students, argues David Breneman, dean of the education school at U-Va. "Just imagine if we provide free tuition to those in-state students we turn down. How many of them would be calling their legislators saying, 'So you gave me a merit scholarship, but now I can't get into U-Va.'?" Breneman says.

For Kagalis, the Hope Scholarship was never a factor in her choosing to attend the University of Maryland. But now that she is on the hook to pay back at least two years of the scholarship, she is beginning to think about staying in the state after graduation. "The problem is, if I don't find a job or graduate school around here, I won't have enough money saved to pay that scholarship back," she says. "It really puts you in a bind. You don't want to turn down the scholarship, but you also don't want to give up a good job opportunity somewhere else. That's a tough choice to make."

Jeffrey Selingo is a senior editor at the Chronicle of Higher Education.