According a recent U.S. Department of Education report, higher education has reached a troubling milestone: the country’s public and private four-year colleges are now spending a greater share of their institutional aid dollars on trying to attract the students they desire than on meeting the financial need of the low- and moderate-income students they enroll.
The report from the Education Department’s National Center for Education Statistics provides the clearest picture to date of how colleges, under the sway of enrollment management consultants, have fundamentally changed the way they spend their institutional aid dollars, to the detriment of low-income students.
Fifteen years ago, colleges primarily devoted their aid funds to making college more-accessible and affordable for those with financial need. For example, according to the report, here is how colleges divided up their institutional aid among first-time, full-time students in the 1995-96 school year:
But in the years since, colleges’ priorities have dramatically shifted. The report found that by 2007-08, merit aid trumped need-based aid at these institutions:
The report also found that “merit aid” does not always go to the meritorious. According to NCES, about 19 percent of first time, full time students at four-year colleges who had SAT scores ranging from 0 to 699 received merit awards from their schools or states, as did 27 percent of those with scores from 700 to 999. In addition, 20 percent of those who had grade point averages of less than 2.0 (below a “C”) received this assistance.
Colleges, in fact, are increasingly using their institutional aid dollars to recruit wealthy students in order to maximize their revenue. The schools generally try to achieve this goal by offering generous institutional aid award to these otherwise “full pay” students, even if these individuals are not as qualified as their less-affluent peers. That leaves the schools with fewer dollars to spend on the low-income students they do enroll.
The overall effect of this change in institutional aid strategies is hardly surprising. From 1995-96 to 2007-08, the share of high-income students receiving grants from any source (the federal government, states, and colleges) has grown from 13 to 18 percent. At the same time, the share of low-income students receiving grant aid has dropped from 41 to 37 percent, the report states.
These numbers are alarming in and of themselves. But judging from other recent reports and studies that we’ve written about, the shift from need-based to merit-based aid has only accelerated over the last few years as colleges have grappled with the financial downturn and significant reductions in state higher education funding. For example:
Higher Education has indeed reached a milestone, but it’s not one that should make college leaders and lobbyists proud. Hopefully the NCES report will finally spur policymakers to take notice of how colleges are, as USC’s higher education experts have pointed out, increasingly using “financial aid as a weapon for competitive advantage,” rather than as a tool for advancing the federal government’s mission of making college more accessible and affordable for those who would not be able to attend without the help.