Aid for the Rich?

New research links increases in National Merit Scholarships to declines in low-income enrollments.
July 15, 2005

New research backs the views of University of California officials who believe that the National Merit Scholarship Program ends up helping students who may not need much help in the first place.

The University of California this week announced that the six campuses in the system that award National Merit Scholarships plan to stop doing so and instead spend the money on other aid for students. Faculty members and administrators said that their analysis found that low-income and minority students were unlikely to receive the scholarships. Critics say that the program is flawed because it uses scores on the PSAT -- a standardized test on which black and Latino students, on average do not do as well as white and Asian students -- to pick semifinalists.

The California decision was based primarily on research about students in that university system.

Research released by the Cornell Higher Education Research Institute says the same trends are evident nationwide. The scholars analyzed enrollment trends at colleges that finance National Merit Scholarships (other National Merit Scholarships are paid for by corporations) and found a correlation between an increase in college-financed merit awards and a decrease in Pell Grant recipients at a college. Since Pell Grants are the primary federal program for low-income students, the scholars used Pell Grant recipients as a proxy for low-income enrollments.

The research also found that the displacement of low-income students was greatest at institutions that enroll the greatest number of National Merit Scholars.

A paper summarizing the findings urges colleges to consider the impact of National Merit Scholarships (and other merit aid) on low-income enrollments. The findings, the authors write, show "the tradeoff that may exist more broadly between using institutional grant aid to craft a more selective student body than would otherwise occur and using institutional grant aid to attract more students from families from the lower tail of the family income distribution."

The paper was written by Ronald G. Ehrenberg, director of the Cornell institute; Liang Zhang, assistant professor of higher education at the University of Minnesota; and Jared M. Levin, a research assistant at the institute.


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