US: Declining lottery ticket sales linked to higher tuition fees
Share this on
5657

US: Declining lottery ticket sales linked to higher tuition fees

US: Declining lottery ticket sales linked to higher tuition fees

Efforts to make college more accessible in New Mexico and a handful of other states by tapping lottery proceeds are in jeopardy as tuition costs rise, ticket sales slump and state budgets falter.

It would seem that January’s ticket-buying frenzy over the US$1.6billion Powerball jackpot was not destined to last long, since proceeds from weekly lottery draws are failing to keep up with the higher education costs they were supposed to contribute to.

At least eight states have already made or are considering making dramatic cuts to scholarship programmes funded by the lottery. The programmes were introduced to provide affordable higher education in the US and increase access.

The University of New Mexico was one institution expected to benefit from the funding, introducing a lottery-funded scholarship programme to help nearly 50 percent of all first-time, full-time students. But now, tens of thousands of students in New Mexico who depend on the state’s lottery scholarship may have to scrape together more money if they want to continue their education.

College administrators and students alike are bracing for a blow if more money isn’t found.

“This would force students to pay about $1,700 more out of their pockets annually, and most likely, it would mean borrowing more in student loans,” said Terry Babbitt, an associate vice president at the university.

New Mexico boasts one of the nation’s most generous programmes, paying more than 90 percent of tuition for eligible students. Without any new money, the benefit will have to be reduced to about 60 percent, according to the state Department of Higher Education.

The problem begins with falling ticket sales. When a state establishes a lottery, excitement typically builds and consumers rush to buy tickets. As the games mature, sales level off. After 20 years, New Mexico’s lottery sales have plateaued, as have sales for multi-state games like the Powerball.

Changing spending habits play a role too. Millennial consumers, according to some experts, are moving away from lotteries, and many Americans never go inside a store to buy gas anymore, choosing instead to swipe a credit card at the pump – this means there are fewer opportunities for consumers to buy tickets.

 

The problem begins with falling ticket sales. When a state establishes a lottery, excitement typically builds and consumers rush to buy tickets. As the games mature, sales level off. After 20 years, New Mexico’s lottery sales have plateaued, as have sales for multi-state games like the Powerball.

Changing spending habits play a role too. Millennial consumers, according to some experts, are moving away from lotteries, and many Americans never go inside a store to buy gas anymore, choosing instead to swipe a credit card at the pump – this means there are fewer opportunities for consumers to buy tickets.

The rising cost of tuition and tighter government budgets also add to the pressure.

 

Affected states have been forced to make painful changes in recent years, tightening eligibility requirements or reducing the amount of financial aid each student can receive.

In New Mexico, lawmakers introduced dozens of measures over the last decade to shore up their programme, including making one-time appropriations to prop up the scholarships and shifting $19 million in liquor excise tax revenue.

During the legislative session that ended last month, Senate Majority Leader Michael Sanchez pushed through a bill allowing for unclaimed prize money to be transferred to the lottery tuition fund. Experts said that’s a step in the right direction but not enough to close the growing gap.

Other ideas include raising the bar for eligibility. To qualify, New Mexico students must maintain a 2.5 grade-point average and complete at least 15 credit hours a semester at a four-year school.

Students are frustrated at the prospect of cuts.

“The reason we were pushing so hard for solvency this year was because we don’t want to reach the point where we’re looking at a cliff, where we either have to make a decision or students are looking at a 30 percent decrease in funding,” said Jenna Hagengruber, a college senior and president of Associated Students of the University of New Mexico. “That’s an incredibly large drop.”

The scholarships were created two decades ago, shortly after Georgia established a lottery scholarship that became a model for similar programmes throughout the South. Georgia was forced to make changes in 2011 that resulted in a nearly 25 percent cut in the number of students who qualified.

Tennessee has tried to buffer its programme from the volatility of lottery sales by establishing an endowment that can fund scholarships through interest and earnings. Experts say the move could provide a cushion over the short term.

The other five states with lottery scholarships are Arkansas, Florida, Kentucky, South Carolina and West Virginia. More than two dozen states earmark lottery proceeds for education in general.

New Mexico already leads the nation with the highest student loan default rate, federal data show. And even if new funding could be tapped, the problem is expected to linger.

Annual revenue from lottery ticket sales has peaked at about $40 million, while tuition costs for eligible students are expected to top $65 million annually.

Legislators have floated some three dozen ideas in recent years.

One Republican lawmaker said New Mexico’s four-year research colleges regarded the lottery scholarship “as a blank check from Santa Fe” and rapidly raised tuition over the last 15 years.

State Rep. Jason Harper, who has been working on the issue since his election in 2013, suggests that the scholarships serve as a bridge for students after all other financial aid is exhausted.

Associated Press.

Image via AP Images.

Liked this? Then you’ll love these…

DAAD Reveals 5000 Refugees are Competing for 200 German Scholarships

Three Rhodes Scholarships in One Year Makes History for University of Alberta