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With colleges facing growing scrutiny over their use of special grants to attract students who aren't financially needy, but might have high SAT scores, Hamilton College on Thursday announced a shift that may be unique. The institution will completely phase out such awards, in favor of need-based aid.

While a number of private colleges and universities have always awarded only aid based solely on students' financial need, Hamilton believes it is the first institution that has had "merit" awards and then abandoned them. About 5 percent of Hamilton's $21 million aid budget has been spent on such awards. Current students will keep their grants until graduation.

Looking at demographic trends, Hamilton expects to be admitting more needy students in the future, and that was a big part in the thinking now. "We're going to need more financial aid in our budget over time, but before I ask the college for additional resources, I think the responsible thing to do is to look at allocating the funds we have now," said Monica Inzer, dean of admissions and financial aid. "It's right for us to walk away from this now, ethically and morally. It doesn't feel right for us to discount the price for families that can afford to pay, and maybe not to have enough for others."

Like many colleges, Hamilton has used grants to academically talented, but financially comfortable, students as part of a way to build a more competitive class. Many college presidents -- especially at liberal arts colleges like Hamilton -- say privately that they hate the idea of these grants, but feel that they can't drop them unilaterally for fear of watching their best students go elsewhere.

Inzer said that's possible with a few students who have been attracted by the grants. Hamilton has offered a scholarship worth half-tuition (real money at an institution where total costs next year will top $45,000) to the very top of its applicant pool. The goal was to get some of those students -- probably headed for Amherst or Williams or Swarthmore Colleges -- "to turn their heads" and look at Hamilton, an institution that has an excellent academic reputation but doesn't typically land students admitted to those other institutions.

"We might have offered 40 [of the scholarships] to get 10," Inzer said. If the college loses all 10 in future years, even with their SAT scores and grades that are probably a bit higher than Hamilton's averages, she can live with that. "We can admit 10 more excellent students," she said. "This is a risk we can take."

While Hamilton may not necessarily win out with students admitted both there and to Williams, the most common colleges that overlap with the institution's applicants are Colgate University and Colby and Middlebury Colleges, and all of them give aid based only on financial need, except Colgate, which does award a small number of athletic scholarships.

Like most private colleges, Hamilton doesn't have the money to admit students without regard to need. After the aid budget is used up, Hamilton doesn't admit students who need aid, and that means the last 4-6 percent of each class is admitted in an "aid sensitive" way. Inzer said that there are limits on what the college can afford, but that she was particularly troubled by the prospect of the "aid sensitive" portion of the class potentially increasing if the college continued to spend some of its money on students who didn't really need it.

While Hamilton appears to be the first college to have and eliminate non-need scholarships, a number of institutions have moved in that direction. Grinnell College's strategic plan calls for it to gradually shift more of its aid to need. George Washington University this month announced a plan to shift $2.5 million annually toward need-based aid.

Robert Massa, vice president for enrollment management at Dickinson College, said "I absolutely applaud" Hamilton's move. Dickinson was awarding 20 percent of its aid budget to those without financial need in 1999, and has brought that share down to 6 percent.

Massa said that the term "merit aid" is a euphemism, even if some of the recipients are bright. "This is basically bribe money -- trying to change students' enrollment choices," he said. "I think we need to acknowledge up front that this is not money to reward students for excellent academic performance. It attempts to change enrollment decisions from institution A to institution B. It does nothing for access."

While conventional wisdom has held that colleges need non-need awards to attract the best students, Massa said that his experience at Dickinson questions that. The college has seen applications, academic qualifications, and the diversity of the applicant pool all increase as more aid has shifted to being need-based.

Families are looking for value, Massa said, and if colleges imply that they are offering deep discounts, they can undercut perceptions of what the institution is worth. "If it's not seen as worth the price, they won't pay" even a discounted rate, Massa said. "Value is more than price, and value costs money."

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