Marginal Cost?

It would be interesting if the author were to extend his econometric analysis into the planning context of this “unnamed” college. My back of the napkin calculation based solely upon the gross effects of the experimental results may stimulate such a planning and public policy discussion. In the experiment, nine additional high ability students were enrolled in the merit aid group over the seven who were enrolled without merit aid. The marginal cost for each additional merit aid recipient would be $166K/9=$18.4 in the first year and would cost 4*18.4=73.6K over four years. Is $74K a justifiable expense to the college? How does this expense compare to the cost of enrolling a high-need student for four years? Does the college balance off the high cost of the merit scholarship winners by not enrolling as many low income students? How would the college assess the trade off between enrolling higher ability students and the opportunity costs of lower access and of reduced income diversity in the student body? What is the long-term private cost to students who may turn down their first choice institution for a short-term monetary incentive? To Don’s question, do the marginal costs of a merit program increase in subsequent years, as past research has suggested? Do growing marginal costs of these merit scholarship programs lead to larger tradeoffs that increase the hidden costs to the institution and work further against public interests?

Bob Lay, Dean for Enrollment Management at Boston College, at 1:31 pm EDT on March 27, 2007

Merit Scholarships

What appears to be missing from the analysis is the impact of outside competition. Perhaps the students which chose not to accept the $7,000 offer had a better offer at another institution.

Reba, at 8:45 am EDT on March 28, 2007

Travesty of Elimination of Merit-Based Scholarships

The Travesty of the Elite Colleges’ Elimination of Merit-Based Aid: One Mom’s Opinion

After spending many months with my son researching colleges across the country and finding the “perfect fit” for him, I am appalled by the injustice that is going on with “financial aid.” Although my son could have attended the local state school for free, the best “fit” for his college goals was to attend a highly academic small private liberal arts college. He worked exceedingly hard in order to earn admission to many of our nation’s top ranked colleges and universities.

We are a family of six that is “stuck in the middle” between not qualifying for “financial aid” according to the government standards, and not being able to “afford” the $46,000/year cost of a small private liberal arts college. We are dependent upon merit-based scholarship money in order for him to meet his college goals. There are hundreds of thousands of students in this country that are in this same quandary. Many of these students, like my son, are top-notch kids that have superior achievements and are worthy of merit-based awards. However, we found out in this whole process that although he is worthy of acceptance into some of the most selective schools in the nation, such as Bowdoin, Hamilton and Pomona, he is not worthy to attend, because these selective schools choose not to reward outstanding achievements unless your family makes below a certain income. That income level is dictated by the federal government. If the federal government is the one dictating where my son can afford to attend college, then I would like to be able to receive a federal tax refund in order to pay for my son’s college. If I did not pay such exorbitant taxes, then I would have no problem paying for the so-called elite colleges.

Why are these colleges willing to sacrifice highly qualified students by giving all of their endowment money to “need-based” financial aid, rather than sharing the endowment with merit-based aid?

The elite colleges in this country are always professing that they want diversity on their campuses. They want students with varying backgrounds, values and experiences and yet they are shutting out an entire socio-economic class of families in this country by eliminating merit-based aid.

I have no problem with need-based aid, but I do have a major problem if that need-based aid is given out in lieu of merit-based aid. If the selective colleges could find a balance between need-based and merit-based aids, then they would have true diversity in their student body, while maintaining their high level academic profiles.

There is another solution to this dilemma, but only the colleges with endowments in the billions would be able to meet this challenge. If the so-called elite colleges really wanted a truly diverse, highly academic profiled student body, then they would abolish tuition all together. Many of the Ivy League institutions have big enough endowments to accomplish such a bold challenge, but are they brave enough? By abolishing tuition, many of the superior academic upper-middle class students would then willingly apply to these highly selective institutions. The applicant pool would thereby be the best possible, since there would not be the obstacle of tuition that prevents many of them from attending or even applying. The typical “trust fund babies” would continue to apply and attend, and most likely donate to the endowment anyway, even if there was no tuition. This would enable the endowments to continue to be funded.

In the end, our family chose not to second mortgage our home and my son chose not to bury himself in student loan debt, in order to attend one of the so-called elite colleges. My son made the decision to attend Hobart College, which is an excellent academic institution that still believes in rewarding superior academic achievements and potential, by investing in merit-based scholarships as well as need-based scholarships.

I believe more and more highly qualified upper middle-class students will continue to flock away from the so-called elite colleges that have chosen to eliminate merit-based scholarships, and attend colleges and universities that reward achievements regardless of the family income level.

As a result, these other colleges will get the highly academic profiled student body that is truly diverse. We are very grateful to all of the institutions that continue to honor and award merit-based and need-based scholarships, some of which include from our experience: Case Western, Clark University, Emory, Hobart, Loyola, NYU, Occidental, Rollins, Skidmore, Stonehill, and Trinity College.

In my humble opinion as a mom, any college or university that wants to maintain the highest level of academic excellence and a diverse student body, should either invest in merit-based scholarships or abolish tuition all together.

Lisa Barlow

Phoenix, AZ

Lisa Barlow, Merit Scholarships Attract Top Students, at 12:20 pm EDT on May 11, 2007

affordability

Here is a interesting discussion board about affording/not affording the Ivy’s and other schools for the middle class.

http://talk.collegeconfidential.com/showthread.php?t=321308

Lisa Barlow, at 10:35 am EDT on June 6, 2007