Maryland students who receive need-based financial assistance are about as likely to stay in college and to graduate on time as students who did not receive this type of aid, according to a study released last week by the Maryland Higher Education Commission.

The findings are likely to fuel a national debate over whether states' student aid should be awarded based on need or merit. While critics of merit-based aid programs worry that they benefit mainly well-to-do students who would attend college anyway, other experts argue that need-based aid is given to those unable to handle the challenges of higher education.

The study, which looked at progress over a five year period for students who received need-based grants during the 1996-1997 academic year, contradicts that notion. It shows that students who participated in Maryland's need-based programs were more likely than those who did not to re-enroll for their sophomore year and to transfer from community colleges to four-year institutions.

About half of the recipients of need-based aid at the state's four-year colleges earned a bachelor's degree within five years, making them nearly as likely to do so as all other students.

The findings are "consistent with 50 years of study," said Thomas G. Mortenson, a senior scholar at the Pell Institute for the Study of Opportunity in Higher Education, a research organization in Washington.

While students from low-income families may not be "as prepared as other students" for the college-application process, "you can't say they're not as smart," Mr. Mortenson said.

The study followed by just five weeks Gov. Robert J. Ehrlich Jr.'s decision to shift millions of dollars from Maryland's merit-based financial-aid programs to those based on need -- a move that bucked a recent countrywide trend of putting state dollars into merit-aid programs (The Chronicle, January 30).

"When we committed additional money to need-based aid, we did it because it was the right thing to do," Governor Ehrlich, a Republican, said in a written statement released last week. "This study shows us that an investment in need-based financial aid is money well-spent."

Lawmakers would do well to follow Mr. Ehrlich's lead, even though it goes against the national trend, Mr. Mortenson said.

"We've moved away from an agenda where financial aid is targeted on those who need it to an agenda where financial aid is targeted on those who vote," he said.