Jayme Hopewell has been a student at Bluegrass Community and Technical College since 2010, trying to get an arts and science associate degree at the same time she works and raises her son on her own.
In late February, she filled out her annual application for a grant from Kentucky's College Assistance Program, or CAP, which helps low-income Kentuckians pay for college. She was out of luck.
The state began accepting applications for the program Jan. 1. By Feb. 7, the fund's $60 million had been doled out. It's not yet clear how many students were turned down, but 80,724 were denied in 2011.
"It was hard for me because I depend on financial aid," Hopewell said. "I do think people who intend to go to school should be able to get some help."
She later won a scholarship that allowed her to return to school, but thousands of other Kentucky students aren't that fortunate.
The same thing happens every year, for several reasons:
■ The General Assembly routinely raids funds from the Kentucky Lottery that are supposed to be used for student financial aid. Kentuckians approved the lottery in 1989 on the understanding that 100 percent of its proceeds would go to education. Instead, legislators suspend the law that directs lottery money to education and use it for other programs — to the tune of $90 million since 2006.
In addition, funding for financial aid is based on estimates of lottery proceeds rather than actual lottery sales. Since 2006, the lottery has produced $78 million more than was estimated, but the extra money went into the state's General Fund budget instead of paying for financial aid.
■ The merit-based Kentucky Educational Excellence Scholarship, or KEES, earned by every high school student with a GPA of 2.5 or higher, receives funding priority over need-based grants.
■ With a sickly economy, experts say more and more Kentuckians are realizing they need college degrees. That means more students are competing for the same pot of financial aid, all while tuition rates continue to climb.
The students penalized most by the lack of need-based aid are often those at community colleges. Although institutions tell students to apply early for need-based aid, experts say community college students often lose out because they might not decide to go to school until the last minute based on factors such as employment and family.
"Community college students tend to apply later because things happen in their lives," said Runan Pendergrast, financial aid director for BCTC. "They might lose a job and suddenly need to be retrained in some area."
Without enough aid, many students are forced to get loans. In 2010-11, the average Kentucky student graduated with a student-loan debt of $19,000. In all, 58 percent of students had college debt, which is growing at a rate four times faster than the state's gross domestic product, according to the Kentucky Higher Education Assistance Authority, or KHEAA.
Despite the staggering numbers, there's no one making a strong push to provide more need-based aid to Kentucky students, said Joe McCormick, who stepped down as director of KHEAA in 2006.
"During the time I worked at KHEAA, I wasn't able to identify a champion of need-based aid anywhere in the public or the legislature," McCormick said. "And I don't see that now. I don't see any initiatives being put forth to increase need-based aid, given the fact that state support is continuing to dwindle and colleges have no choice but to increase their tuition.
"The ones who really lose out are the poor kids of Kentucky."
KHEAA operates most of the state's college aid programs, including the merit-based KEES scholarship and the need-based CAP grant and Kentucky Tuition Grant, or KTG, which is given to students who attend private colleges.
In 2011, CAP spent $60 million on 37,836 students, and KTG distributed $32 million to 12,400 students.
The trend of having more applicants than money has increased as federal standards have changed, making more students eligible. According to KHEAA, 80,724 eligible students were turned down for CAP funds in 2011, up from 22,870 in 2006. An additional 9,700 were turned down for KTG funds in 2011.
Meanwhile, about 69,000 students received $95 million in KEES awards in 2011.
KEES money is earned throughout a student's high school career and is commensurate with a student's grades. The most a student may earn — with a GPA of 4.0 every year and an ACT score of 28 or higher — is about $2,500 a year.
The scholarship has become a popular entitlement program, and while awards haven't gone up much since 1989, lawmakers have been reluctant to trim any funding.
"The merit-based scholarship is fully funded and the need-based is not," said Rep. Arnold Simpson, D-Covington, who chairs the budget subcommittee on postsecondary education. "It would be very difficult to cut the (KEES) fund because of the commitment made — it's almost like a contract. But it's very important for Kentuckians to understand the funding priorities for our scholarship programs."
According to state law, need-based aid is supposed to get 55 percent of lottery revenue. But in 2011, only 46 percent of lottery revenue used by the General Assembly for education went to need-based aid programs.
"They've taken it from need-based because it would be such a pain to cut back everybody's (KEES) award," said Rep. Carl Rollins, a Midway Democrat who is chairman of the House Education Committee and works for a partner of KHEAA, the Kentucky Student Loan Corp.
Rollins said KEES is "a middle-class entitlement, and we don't want to face the music if the funds are not there. I try to tell legislators every chance I get that need-based scholarships are not fully funded."
Ted Franzeim, senior vice president at KHEAA, said KEES gets a bad rap in the financial aid debate. It has been an "aspirational" program for students who might never have thought about going to college, he said.
"Kentucky has made very real gains in recent years of increasing its college participation rates, and I believe KEES has been a significant reason for that," he said.
About 44 percent of KEES recipients qualify for federal Pell grants for low-income students.
Still, there is a well-researched correlation between family income and academic achievement.
The Legislative Research Commission recently reported that almost 100 percent of the highest income students received KEES awards in 2009, versus 55 percent of those from families making less than $20,000 a year.
The problem is exacerbated by the fact that Kentucky's universities are in an arms race to get the most academically prestigious students to boost their national rankings. That means they direct most of their own financial aid to attract the smartest students, rather than worrying about students who need the most financial help. For example, at the University of Kentucky, only 8 percent of institutional aid goes to students solely based on financial need.
"Of course, that doesn't take into account that many of the students awarded merit-based scholarships have financial need as well," said UK spokesman Jay Blanton.
'Shame on us'
It probably would take about $119 million a year in additional money to fully fund the state's need-based financial aid programs, KHEAA officials have estimated, but that's not expected to happen any time soon.
In 2009, the Governor's Work Group on Higher Education, a group convened by Gov. Steve Beshear to improve higher education, recommended that lawmakers stop the practice of diverting lottery revenue to help balance the state's General Fund budget.
Lawmakers didn't listen. In 2010 and 2011, they moved $20.7 million of lottery proceeds into the General Fund.
"They've done it for as long as the statutes have been on the books," said former state Sen. Tim Shaughnessy, D-Louisville, who retired this summer. "That money should be going into financial aid. Shame on us."
Franzeim said there's no doubt that policy-makers soon will be facing a crisis on how to educate more students without leaving them with too much debt.
"The good news is that we have many more Kentuckians who want to pursue higher education than in the past, and the bad news is the state's financial challenges," he said. "Given our state's demographics in terms of per-capita income and poverty rates, the challenge for policy-makers is to decide how we ensure our most vulnerable citizens have access to higher education."