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Cutting Back on Merit Aid

Cutting Back on Merit Aid
July 13, 2006

One of the major players in merit aid is reversing course.

The University of Florida will substantially cut the financial incentives it has used for decades to attract National Merit Scholars, both to save money, and because university officials say the institution achieved its goal of attracting top students.

Florida had 230 National Merit Scholars in the 2005 entering class, the third most in the nation behind only Harvard and Yale Universities.

For at least 20 years, those students, who are selected based largely on how they score on the PSAT, but also on grades and their ultimate SAT score, have received $22,000 over eight semesters, if they are Florida residents. Out of state students received $38,000 and had out-of-state tuition waived. An additional $2,000 was available for students to use for independent projects or study abroad.

In-state National Merit Scholars entering next fall, however, will get $5,000, and out-of-staters will get $17,000 plus the out-of-state tuition waiver. The extra project money will be reduced from $2,000 to $1,000. Students who have financial need will be treated the same as previously, with regard to need-based aid. Students who have financial need will be treated the same as previously with regard to need-based aid.

Janie Fouke, Florida’s provost, said she analyzed incoming classes, and found that the National Merit Scholars are “statistically indistinguishable from the next 1,000 students that we admit,” she said. “I’m thinking, ‘I’m spending $8 or $10 million and not changing the profile of the freshman class?’”

Fouke said she realized that Florida had achieved the original goal of the incentive program, which was to attract top students. “Maybe since we’ve reached that goal,” Fouke said. "We should set a new goal. We should repurpose that money for a new goal.”

Fouke added that Florida looks for well-rounded students, so “it’s kind of hard to justify making a tremendous financial decision based on a PSAT score.”

Currently matriculating students will still receive the money they were promised. In several years, Fouke said she expects the scholarships for National Merit Scholars to run the institution about $2 million a year, a savings of $6-8 million.

The state of Florida’s Bright Futures program guarantees scholarships – 75 percent or full tuition, based on grades and test scores – to public institutions for all students who meet certain grade and test requirements. For a full scholarship, a student must have a 3.5 GPA, and at least a 1270 on the SAT. Most National Merit Scholars would presumably qualify, so the money that Florida was forking over was spending dough.

“We just write them a check,” Fouke said.

Critics of merit based financial awards say that the money simply lines the generally already gilded pockets of students with top test scores. But many institutions, seeking to raise their average SAT score, embrace merit based payouts.

“Clearly a good number of merit aid recipients are not needy,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.

Nassirian said that, as an enrollment management strategy, merit-based financial incentives can strengthen an institution’s brand name, which attracts more full-tuition paying customers whose money can in turn be used for need-based aid. The strategy works, he said, when a small number of top institutions employ it. When large numbers of colleges get in the game, however, they simply drive one another’s costs up.

Nassirian compared the escalation of financial incentives for top students to an arms race. “Building big missiles may provide a measure of safety if you and only a few others are doing it,” he said. “But when everybody does it, they all remain relatively locked in the same death struggle as before, but at a much higher cost.”

Nassirian added that, if the money that Florida saves is used for need-based aid, it would be a much needed, yet rare step away from bombarding a small group of students with gifts, and toward making college accessible for the largest number of people possible. “We could forever produce windfall merit aid to highly qualified students,” Nassirian said, “who not coincidentally tend to come from affluent families.”

Fouke said that she sees no real downside to the cutbacks, even though people have asked whether she’s worried that some National Merit Scholars will now turn their backs on Florida. “The vast majority of National Merit Scholars at the University of Florida are from Florida,” Fouke said. “There’s not another school in Florida that has the academic profile of the freshman class that University of Florida has.”

Fouke added that other Florida institutions have capped the number of National Merit Scholars -- 25 at Florida State University, for example -- that can receive big bucks.

Fouke said talks have just begun as to how the savings might be used, but she said two ideas on the table are: to distribute the money as need-based aid, or to award more graduate research fellowships.

Fouke added that, in the 10 days since the changes were announced, she’s gotten one angry letter from a prospective student, and has heard from a couple of disappointed students.

As to her quantitative analysis of the freshman class that led to the changes, “some people say it’s dangerous to have an engineer in the provost’s office,” she said.

 

 

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