(CNNMoney) Oregon became one of the first states to make tuition free for new students at community colleges last year, but the cash-strapped state can't fully fund the program this fall.
Now some students won't be able to participate.
Due to high turnout and limited funding, the eligibility requirements for the scholarship had to be changed -- disqualifying some of the wealthier students.
Lawmakers appropriated $40 million for the Oregon Promise program for the next two years, knowing it was $8 million short of the projected cost.
Despite the budget shortfall, the state expects to still award scholarships to four out of five of the new eligible applicants, according to the Oregon Higher Education Coordinating Commission.
And more freshmen could receive the scholarship than last year. More than 15,000 applied and at least 8,300 new applicants have been notified that they are eligible to date.
The new income-related criteria does not apply to the 6,800 students who received the scholarship last year. They will continue to receive the money regardless of income. And the new criteria is not permanent. It will be reconsidered annually and change based on the availability of funds.
State Senator Mark Hass, a chief architect of the program, is hopeful that full eligibility will be restored next year. But for now, he said he doesn't consider the rollback detrimental.
"Most kids will still be able to get the scholarship. It's just upper-end families who won't and, frankly, they're aren't too many of those at our community colleges anyway," he said.
The new criteria cuts off students whose families are expected to be able to contribute $18,000 or more to pay for college this year, based on information submitted on the Free Application for Federal Student Aid (FAFSA). It considers how much money a family has, how many kids are in college, and the cost of the school.
By many measures, the first year of the Oregon Promise was a success. Interest topped initial expectations, which projected that between 4,000 and 6,000 would receive the scholarship.
The scholarship saves full-time students between $1,000 and $3,540 per year.
Not only did it make college more affordable, it encouraged more recent high school grads to enroll in community college. Preliminary data shows that between 1,000 and 1,200 additional students enrolled.
A survey found that about one-quarter of those who received the scholarship said that without the Oregon Promise, they wouldn't have gone to college at all. Others might have gone to a four-year school instead.
Oregon has 17 community colleges, where more than 290,000 students are enrolled. Hass believes getting more students into college will help the state economy.
"You can't do much in today's economy with just a high school degree. When you go down that path, it's a path that leads to poverty. And poverty is pretty expensive," he said.
While the Oregon Promise is significant, it fell short of making tuition at community colleges free for everyone even before this year's added criteria.
First, students must apply for the scholarship and fill out the FAFSA. Only high school students immediately going on to college after graduation and recent GED recipients are eligible -- leaving out most students at community colleges who return to school after a few years in the workforce.
They must be an Oregon resident for at least a year and have earned at least 2.5 GPA in high school. Once they're in college, students must maintain at least half-time enrollment.
The scholarship doesn't cover living costs. It only covers the remaining cost of tuition after the students use any other need-based grants from the federal government and state. That means the poorest students got less money from the Oregon Promise than those from wealthier families last year, because other grants already cover the cost of tuition.
But unlike similar programs in other states, the Oregon Promise awards a minimum of $1,000 so that the poorest students would still receive some additional money from the program to help with other costs like college fees, books, and transportation.
Other state programs have restrictions too. In New York, there's a permanent income cap that disqualifies anyone who comes from a family that earns more than $125,000. Though, students at four-year schools are eligible just like those at community colleges.
In early August, Rhode Island lawmakers approved a plan for community college students only. Like New York, it also stipulates that students to live or work in state after graduating -- something Oregon does not require.
"These states are trying to build a more sustainable funding model for higher ed, but they're hindered by a lack of resources. They're taking baby steps," said Sara Goldrick-Rab, a professor of higher education policy and sociology at Temple University and an advocate for making college accessible for all.
While Oregon, New York, and Rhode Island are footing the bill with taxpayer money, Tennessee's program is funded by the state lottery. It began by offering new students free tuition at community college in 2015, but will expand eligibility next year to adults returning to school as well. There is no income cap.
Goldrick-Rab still considers Oregon's program generous, despite the restrictions and the cut back this year.
"I don't like that they're getting slammed for it. I think they're being really careful with taxpayer dollars and I find that really respectable," she said.
Correction: An earlier version of this article reported that some students were still waiting to hear whether they qualified. In fact, all applicants have been notified.