Is Merit Aid Creating Opportunities, or Just Boosting Tuition Rates?
Posted By Eliana Osborn on January 21, 2016 at 3:01 pm
In an upper-middle-class family, students are often frustrated by the college financial aid process. Their family, on paper at least, makes too much money for the student to qualify for need-based assistance, but that doesn’t mean a family has cash on hand to shell out for private or even public universities. That’s where merit aid comes in.
A recent study from the organization New America looks at how merit aid is used by public universities to entice students to attend. Merit aid can come in the form of scholarships, grants, teaching assistantships, or other funding; what makes it different from other financial aid is that this money is handed out based on academic excellence rather than need.
The line between need and merit isn’t always so clear, and over the past several years, there has been an emphasis on giving low-income students priority for scarce resources. But with state higher education funding cuts continuing, student access to floods of enrollment data, and other factors, public colleges are using merit aid to attract learners who might have ignored them otherwise.
When public universities offer merit aid, they generally are not covering the full cost of tuition. For an out-of-state student, that means he or she is still paying a substantial amount of money to attend the school—often more than an in-state student with no aid. That means cash flow for these institutions, grabbing students who’d otherwise be spending their money at private or local universities. One example, the University of Alabama, has more out-of-state than in-state students in attendance.
The second benefit of merit aid is in recruitment. Getting top students to attend your school makes you look good. According to the report, 70% of public colleges and universities surveyed had at least 5% of freshmen students receiving merit based financial help. This student population helps the regional or state schools rise in ratings, gaining greater national prominence.
As public institutions chase high-performing students, trying to get them to attend by offering higher and higher amounts of merit aid, many schools feel they have to be part of the chase. It has become a vicious cycle where money for those most in need is dropping away in order to seek out the few top scholars and try to lure them. And the very purpose of state schools is changing when they try to attract out-of-state students rather than serving the youth living nearby.