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Report: Data Challenge Narrative on Merit Aid

May 8, 2019

A new analysis finds no evidence that the total institutional financial aid that public and private nonprofit colleges provide to high-income students has increased in recent years relative to the aid institutions provide to low-income students. And contrary to findings from previous analyses on so-called merit aid (meaning not need-based aid), the report found that subsidies nonprofit colleges provide to low-income students have increased relative to their wealthier peers.

Jason Delisle, a resident fellow at the American Enterprise Institute, and Cody Christensen, a research associate at AEI, are the new report's co-authors. They wrote that measures of merit aid often fail to distinguish what is a "notional discount" on an inflated tuition price rather than real benefits.

"Tuition can vary considerably for different types of students, even those attending the same institution," they wrote. "Differentiated pricing alone can make it difficult to know how much each student pays to attend an institution of higher education. Further complicating the question is the fact that institutions of higher education can inflate prices by as much or more than the aid they offer to students."

The new analysis looked at the total amount colleges spend on students and compared it with what they charge in tuition. Results for public institutions follow below.

The chart below includes results for private colleges.

"For those worried that the financial aid practices of colleges and institutions have exacerbated inequities in our higher education systems, this analysis finds reason for optimism," the report said. "At public institutions, low-income students now receive larger financial aid benefits from those institutions than their high-income peers do, which is a change from over a decade ago. Meanwhile, the subsidies that private nonprofit institutions provide low-income students have surged since the earliest year in this study, far outpacing gains in awards for high-income students."

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Paul Fain

Paul Fain, Contributing Editor, came to Inside Higher Ed in September 2011, after a six-year stint covering leadership and finance for The Chronicle of Higher Education. Paul has also worked in higher ed P.R., with Widmeyer Communications, but couldn't stay away from reporting. A former staff writer for C-VILLE Weekly, a newspaper in Charlottesville, Va., Paul has written for The New York Times, Washington City Paper and Mother Jones. He's won a few journalism awards, including one for beat reporting from the Education Writers Association and the Dick Schaap Excellence in Sports Journalism Award. Paul got hooked on journalism while working too many hours at The Review, the student newspaper at the University of Delaware, where he earned a degree in political science in 1996. A native of Dayton, Ohio, and a long-suffering fan of the Cincinnati Bengals, Fain plays guitar in a band with more possible names than polished songs.

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