This is obviously troubling for the students who need help, but it is also bad for the state economies that public colleges are supported by and are supposed to help advance. While merit aid sounds like an effective way to combat brain drain, there is no conclusive evidence that it works. One recent study by economists at Cornell and the University of Chicago found that “nearly all” of the spending on state merit-based scholarships had little effect on keeping students in state after they graduated. Merit aid may not even be a good deal for those who earn it. A recent study by researchers at Harvard Kennedy School looked at a scholarship program in Massachusetts in which high-scoring students get tuition waivers at in-state public colleges. It found that taking the scholarship actually reduced a student’s likelihood of graduating because they ended up at a school with a completion rate lower than one of the other schools they could have gone to. Peer effects matter, it turns out. The long-term costs of going to school among those who are more likely to drop out could outweigh the upfront benefits of a cheap education.

Financial aid, however, has a hugely positive impact on whether low-income students graduate. Among needier kids, the six-year graduation rate is 45 percent when grants cover under a quarter of college costs versus 68 percent when they cover more than three-quarters, according to Mark Kantrowitz, the publisher at Edvisors.com, a network of college-planning Web sites. If you look at comparable stats for high-income students, the amount of aid makes almost no difference. Their graduation rates are around 78 percent either way.

The share of Americans with college degrees has risen significantly in the last few decades, but almost all of the growth has been among children of wealthier families. The share of 24-year-olds from families in the top-income quartile who hold college degrees rose from about 40 percent in 1970 to 70 percent in 2011. The share from the bottom quartile, however, remained pretty flat, edging up to 10 percent from 6 percent, according to Tom Mortenson, a higher-education policy analyst with Postsecondary Education Opportunity. These graduation rates also matter. Not only is the gap between the earnings (and employability) of college grads versus high-school grads widening, but an increasing amount of research shows that having a higher density of college-educated workers boosts wages of even those around them without college degrees. Economists refer to the ripple effect as the “positive externalities” of higher education.

By devoting more aid dollars to the likely college students rather than to more marginal ones, states are limiting the overall pool of residents who will be able to obtain college-level skills. Perhaps just as important, they are also limiting the economic prospects of their entire populations. The institutions that try to maintain their commitment to needy students like Russell, even in the face of state-budget cuts, recognize that extending access to college isn’t just about altruism. It’s about investing in your future tax base. And that’s thinking outside the box.