The Tennessee Education Lottery Scholarship (TELS) program was designed to meet the unique needs of the state of Tennessee by incorporating the hallmark elements of existing merit-based aid programs in other states. Developed through a process involving elected officials and members of the academic community, the TELS program aims to address the following broad public policy objectives: (1) Improve academic achievement in high school through scholarship incentive; (2) Provide financial assistance as a means of promoting access to higher education; (3) Retain the state's "best and brightest" students in Tennessee colleges and universities; and (4) Enhance and promote economic and community development through workforce training. The Tennessee Education Lottery began operations on January 20, 2004. Lottery proceeds fund scholarships for Tennessee students attending eligible public or private colleges and universities across the state. This report is divided into five major sections: (1) "Program Overview and Recipient Demographics" describes the program's objectives, eligibility requirements, and size and scope; (2) "Scholarship Renewal" describes the rates at which freshman cohorts receiving various types of scholarships renewed those awards, focusing particularly on differences in scholarship renewal across levels of family income and academic preparation; (3) "College Retention" longitudinally tracks the Fall 2004 first-time freshman class through their fifth year of college and/or graduation, with or without the scholarship; and first-to-second year retention of all classes, with an emphasis on the Fall 2007 first-time freshman class; (4) "Best and Brightest", an examination of student matriculation patterns prior to and following the lottery scholarship program; and (5) "Summary Findings from Recent Lottery Scholarship Research" on second year scholarship renewal and the Non-traditional Student Grant. Appendices include: (1) Lottery Participation of Tennessee Residents Enrolled in Public Institutions as First-Time Freshmen: 2004-2008; (2) High School Preparation Levels of Fall 2007 First-Time Freshman TELS Recipients, by Initial Postsecondary Sector; (3) Fall 2008 Scholarship Renewal by High School Preparation Level of Fall 2007 TELS Freshmen, by Initial Postsecondary Sector; and (4) ACT Composite of Tennessee Residents 19 and Under Enrolled in Public Institutions as First-Time Freshmen 2004-08. (Contains 22 tables, 5 figures and 3 footnotes.)