In an attempt to reduce the college drop-out rate and strengthen the economy, Gov. Jennifer Granholm has proposed changes to the state’s merit scholarship program that could boost the amount of financial aid in-state students receive.

Despite the promise of increased aid to more students, some critics assert that lower-income students will see a decrease in the merit aid they can receive.

Announced last month in Granholm’s State of the State Address, the program involves the termination of the Michigan Educational Assistance Program exam, known as the MEAP, taken by Michigan high school students who wish to receive merit-based aid. In addition, under the new plan, students who qualify for the award would receive $4,000, instead of the current $2,500 scholarship. But the biggest change will be the timing of the award, which will now be received after completing two years of higher education, instead of prior to admittance. Granholm however, has yet to determine how students would qualify for the proposed merit-based award.

Granholm’s plan enacts the recommendations of the Cherry Commission, an advisory board that worked to bring about higher standards in education and the economy.

State officials said they have seen problems with the current merit scholarship. Spokeswoman for the governor’s office Heidi Hanson said the current system does not effectively deal with the high drop-out rate in the state.

“Students (often) enroll and take a couple of classes and then drop out. We’re not rewarding them for the results that we’re looking for,” she said. According to the University’s Office of Financial Aid, 3,518 students at the University received the merit award last year.

Terry Stanton, public information officer at the Michigan Department of Treasury, said there is evidence that this new timing will give students the incentive to get their degree. “Studies show that once a student completes two years, that student is much more likely to remain in school and therefore graduate,” Stanton said.

If what these studies predict is true, then Granholm’s proposal could serve as a catalyst to the governor’s goal of doubling the state’s college graduates in the next 10 years — a goal that Hanson stressed would greatly help the state’s struggling economy. “The states that have the most educated workforce have the most robust economies,” she said.

A concern that some adversaries of the program hold is that the new proposal will end up hurting low-income students. Currently, a low-income student receiving a Pell Grant — a federal grant based solely on need — can also receive the merit scholarship. Under the proposal, however, the merit award would completely subtract the amount received through a Pell Grant, Hanson said. Therefore, a low-income student that qualifies for the $4,000 merit award and also receives a Pell Grant of $3,000 would receive $1,000 after the two grants are subtracted.

Pamela Fowler, the Director of the Office of Financial Aid, said the problem in the program lies in this change. “I don’t like any program that subtracts the amount of a student’s Pell Grant ­— it seems to hurt the neediest students,” she said. She added that 3,335 students at the University received the Pell Grant last year.

LSA sophomore Rachel Hathaway said the deduction of the Pell Grant would be unfair to those students. Hathaway, an in-state student, received a merit-based award as well as some need-based financial aid. “I think the merit and the Pell Grants should be separate. You shouldn’t be penalized based on your income if you qualify for the merit-based aid,” she said.

Others feel that giving the award two years into college instead of in the beginning will also deter low-income students from obtaining a higher education. Jan Sveinar, a professor of labor economics at the University, said there is a tradeoff in the way the new system will affect the state economy. Though he agreed that the new system would reduce the number of drop-outs, he also said it may discourage students who don’t have the resources to enter into the University in the first place. He said this would be detrimental.

“The evidence is overwhelming — students that receive a degree are more productive and earn better wages. This is a great benefit for the economy,” he said.

LSA junior Bill Salmonowicz is an in-state student who qualified for the merit-based aid. He said the MEAP exam is fairly basic and most people he knew in high school qualified. “It gives a lot of kids money,” he said. Because of this, Salmonowicz opposes Granholm’s proposed changes.