In order to save the state money in tough financial times, New Jersey lawmakers have voted to make two popular merit-based scholarship programs more selective.

NJ STARS -- a state-sponsored scholarship program introduced in 2004 -- covers the tuition and fees ar any of the state’s 19 community colleges for high school students who graduate in the top 20 percent of their class. STARS II -- an accompanying program launched in 2006 -- provides scholarships of $4,000 per year at any four-year public college for STARS participants who graduate from community college with a grade point average of at least 3.0. The participating institution, by law, must cover the remainder of the cost for all qualified candidates.

Interest in the scholarships has grown significantly through the years. Recent projections note that STARS financially assists more than 4,100 community college students and STARS II helps around 1,200 students at four-year institutions annually. Still, for all of its popularity, some lawmakers warned that the program was in jeopardy.

“As much as NJ STARS has become a source of pride for students and their families, the program is at imminent risk of becoming a victim of its own success,” said Patrick J. Diegnan Jr., a Democratic member of the state assembly who represents the area around South Plainfield and chair of the higher education committee. “Reserving NJ STARS scholarships for the smartest, hardest working and most deserving students will protect its long-term viability.”

The New Jersey General Assembly and Senate approved major revisions to scholarship programs Monday that are expected to be signed by Gov. Jon S. Corzine in the coming weeks.

Changes in STARS would limit eligibility to high school graduates in the top 15 percent of their class. To thwart students from taking easier courses to qualify for the grants, the changes would require students to complete a “rigorous series of high school courses” to become eligible. These further requirements will be defined at a later date by the New Jersey Commission on Higher Education. STARS would also no longer pay for remedial coursework taken by its participants upon entering community college -- which, a legislative work committee discovered, more than 30 percent of STARS participants have needed in the past.

Changes in STARS II would limit eligibility to STARS participants earning at least a 3.25 grade point average upon graduating from community college. Also, students whose family income is greater than $250,000 a year would be ineligible for STARS II. Currently, there are no caps on the total scholarship amount. But if changes are made, the scholarship would be limited to a maximum of $6,000 annually for students with a community college grade point average of 3.25-3.49 and $7,000 annually for students with a community college grade point average of 3.5-4.0. These funds would be limited to cover tuition only and not fees, unless a student qualifies for other need-based aid. The cost of STARS II scholarships would be divided equally between the state and the participating four-year institution.

As a result, these institutions would no longer be required to cover the remaining cost of tuition and fees for STARS II participants. Students not receiving other need-based aid -- such as the state’s Tuition Aid Grants -- would have to cover the remaining tuition and fees themselves. Tuition and fees for Rutgers University is $11,562 this year. So, a student receiving the maximum amount of money -- $7,000 -- from STARS II would still have to pay $4,562 to make up the gap in tuition and fees. Under the present system, a STARS II student would have a $4,000 grant from the state and Rutgers would make up this difference.

Students currently receiving STARS funding as freshmen in community college would be partially grandfathered and have to meet only the old requirements for their remaining semesters. They would, however, have to meet the new requirements when applying for STARS II. Community college sophomores earning STARS money would also be partially grandfathered and could qualify for STARS II money by meeting the old requirements. Students earning STARS II money at four-year institutions would be fully grandfathered and would retain their financial benefits.

Jacob C. Farbman, spokesman for the New Jersey Council of County Colleges which represents the state's public two-year institutions, said part of the intent of these changes was to save state institutions money. A number of state colleges and universities were spending so much money for STARS II transfers that they had to cut aid to other students. For example, he noted that Rowan University in southern New Jersey had been spending $1.5 million annually on STARS II transfers alone. He also said Rutgers University has had to significantly cut the number of scholarships it had available to Phi Theta Kappa members -- a two-year college honor society -- as a result of increased aid to STARS II transfers.

Candice Howard, Assemblyman Diegnan’s chief of staff, said these two scholarship programs were at risk of being cut if they were not reformed.

“I don’t think anybody was happy about making these difficult changes,” she said. “Still, these were changes that had to be made to save the program. It was growing so rapidly that it was getting ahead of itself.”

The new restrictions on the scholarships, however, do not please those who find already find the programs to be flawed. Michael Patrick Carroll, a Republican member of the state assembly who represents the area around Morristown and is a member of the higher education committee, opposed the changes.

The revelation that a significant portion of the students who took advantage of STARS needed some sort of remediation upon entering community college struck Carroll. Instead of targeting the top 15 percent of each high school’s graduating class, he said, it would be better to target the top 15 percent of high school graduates in the state as a whole, as measured by the SAT or a similar test. He said it might also be better to bypass community colleges and fund tuition for four-year universities initially instead. His major objection to the changes, however, is the new $250,000 limit on family income for participants in STARS II.

“This bill became a money saver, instead of a real reform,” Carroll said. “I don’t mind saving money. My objection is that it was a bad reform. If the idea was to help the best and brightest stay in New Jersey, it needs to be need-blind. The original proposal was supposed to be merit-based and need-blind.”