Lottery tickets are not a big line item in our household budget. We have a tradition of buying scratch-and-win tickets for everyone who joins us at Christmas Eve dinner. No one remembers quite how this ritual started, but it seems to have phased in around the time we were phasing out Santa. Perhaps we replaced dreams of sugar plums with fantasies of hitting the jackpot. In any case, this holiday custom sets us back about $25. And of course, whenever there’s a huge Powerball prize at stake, I fork over five or ten bucks for the pool at work, unable resist the enthusiasm of our office manager, Mary Lyon, who talks about her plans to buy a villa in Tuscany. So, on average, I chip in thirty or forty dollars a year to the Georgia Lottery revenue stream.
But I’m a big lottery winner. Not villa-in-Tuscany big, but full-tuition-at-UGA big, thanks to the lottery’s HOPE scholarship program — and hard work by my kid, who qualified for a Zell Miller scholarship and, more importantly, has kept it through two semesters of Organic Chemistry, no less. The total cost (tuition, fees, books, housing, etc.) of attending UGA is currently about $18,000 a year. A HOPE tuition offset brings the cost of a four-year degree down from $72,000 to something in the $44,000-$50,000 range, depending on the level of HOPE a student qualifies for. (Click here for a refresher on last year’s changes in HOPE coverage rates.)
If you’ve even glanced at headlines in the past week, you know that the cost of college is steep — and rising. The average 2010 graduate finished college owing $25,250 on student loans. According to the Project on Student Debt, only 55 percent of Georgia students graduated with any debt, and at $18,888, the average debt carried by those who did was far lower than in other states. Georgia students are at the No. 33 spot when it comes to average student debt; that’s one educational ranking where it’s great to be low. There’s no question that HOPE is a huge factor. Since the program was launched twenty years ago, more than 1.4 million Georgia students have received scholarship aid — $6.4 billion in total — to attend in-state colleges, universities, and technical schools. In the 2011-2012 school year, 202,000 students got aid through HOPE.
So, on behalf of my family, and the millions of others like us in Georgia: Thank you for playing the lottery.
Should people who don’t play the lottery, or don’t play as much or as often, benefit from HOPE? Perhaps not, says the Georgia Budget and Policy Institute, an Atlanta-based think tank which published a report this month showing that residents in Georgia counties with the highest incomes get the most HOPE funding, far outpacing what they contribute to lottery sales. According to the GBPI report — “HOPE for Whom? For Some it Doesn’t Pay to Play the Lottery” — the average Georgian spends $500 annually on lottery tickets. Poorer people spent a lot more — $831 each in the state’s poorest counties compared to $419 in the wealthiest counties. “I ran the numbers a couple times to make sure that was right,” says Cedric Johnson, GBPI policy analyst and the study’s author. “But there was no question. People in poorer counties were literally spending twice as much as those in the more affluent counties.”
Fulton County, for example, ranks in the top fifth by household income (its median is $53,580) and is one of the top recipients of HOPE dollars. Clayton County which is in the third quintile ($36,595 median household income) gets far less in HOPE funds, even though lottery spending is higher ($581 per person compared to $466 in Fulton, according to Johnson’s analysis). Fulton gets $92 per capita in HOPE funds compared to $71 in Clayton.
Which raises the question: Should more scholarship funds be earmarked for counties that spend more on the lottery? The GBPI suggests that more funding should go toward HOPE for technical schools, which are more likely to be attended by students in poorer and more rural counties, where lottery spending is higher. Recent HOPE overhauls have made it harder to qualify for – and keep – grants for technical school. “We want policy makers to be more aware of the benefits, where they come from and where they’re being spent, as they make decisions,” said Johnson.
Perhaps all of us should invest our cash instead of gambling on the lottery. Plugging numbers into the Bankrate savings calculator, reveals that investing $831 a year at a modest 3 percent interest rate starting the day a child was born would yield $19,883 by his eighteenth birthday. Not enough to buy a villa in Tuscany or pay for Harvard, but enough to put a sizable dent into the cost of attending a state college or tech school. When I mentioned this to Johnson, he said, “That certainly might be better way to use that money than the one-in-a-million odds of buying a winning lottery ticket.”