Study Shows Some Colleges Reduce Aid for Students Most Likely to Attend

Finance
Posted By Abby Perkins on March 27, 2015 at 2:26 pm
Study Shows Some Colleges Reduce Aid for Students Most Likely to Attend

Every U.S. student who gets financial help to attend college will have to deal with the Free Application for Federal Student Aid, or FAFSA, at some point in their college career. Though the form is primarily designed to gauge students’ financial need, students are also asked to list their top ten most desirable schools, in order of their preference. And while this might seem like innocuous information, some education experts are concerned that selective colleges are using it to make some shrewd admission and financial aid decisions. And in fact, recent data has proved that these experts are not wholly incorrect.

Financial aid based on interest in attending

Some in the higher education space have long suspected that some institutions base their financial aid on students’ college preferences, as expressed on the FAFSA. Anecdotal evidence has suggested that some colleges and universities offer smaller financial aid packages to students who rank their schools highest on FAFSA. Their reasoning? Students will pay whatever is required to attend the college of their first choice, making financial incentives wasted on these attendees, regardless of need.

In 2014, The National Association for College Admission Counseling, made up of high school counselors, was so concerned about the potential bias in this practice that it asked the Department of Education to stop sharing FAFSA data with colleges. The Association found it problematic that full disclosure of the information’s use was not made available to the students by the educational institutions or the federal government.

Recent data shows practice is not widespread

To determine if there was any empirical evidence to back up suspicions of this financial aid practice, a recent study by Stephen R. Porter of North Carolina State University and Johnathan G. Conzelmann, a researcher at consulting firm RTI International, probed more deeply.

The researchers looked at the financial aid given to students who enrolled at the institution listed as their first choice on FAFSA. Porter and Conzelmann determined that most of these students were not being financially penalized for expressing their school preferences. “At most,” the researchers write, “these students receive institutional grants that are 5% lower than students who do not list an institution as their first choice on the form.” For example, if a student would normally be eligible for a $10,000 financial aid grant, the study indicates that the student might receive $500 less for listing the school as their first choice. These results only applied to some moderately selective schools – according to experts at Inside Higher Ed, potentially because those schools are fighting to increase enrollment or improve their reputation by admitting students with high grades and standardized test scores.

Despite the study’s ultimate finding that the practice is not widespread, however, others in the college admissions field continue to be wary of the practice and feel it is more common than the recent data indicates. Some private college consultants advise their clients not to use the preferential, top ten ranking system on FAFSA, opting instead for an alphabetical sorting of schools.

An “uncontroversial” way to distribute aid

Other experts contend that colleges have many ways with which to assess a prospective student’s interest in attending, including visits to campus, presence at college fairs, phone and email contact with the admissions office, and application for early admission. Porter and Conzelmann believe that strategic allocation of financial aid by colleges is based on a combination of factors that demonstrate a student’s interest in a specific college, in addition to the FAFSA list data. In their paper, they also state: “Changing aid allocations based on campus visits and other signals that occur during the application process is relatively uncontroversial within higher education. If this practice is widely accepted, it is not entirely clear why using FAFSA list information in a similar manner is such an undesirable practice.”

Abby Perkins
Email | Twitter | LinkedIn Abby Perkins attended Davidson College, where she graduated with a B.A. and Honors in English and wrote for The Davidsonian newspaper. Abby's work has been featured on Yahoo! Finance and Entrepreneur. As Managing Editor, Abby is a regular contributor to the GoodCall newsroom, covering education and financial aid.

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