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Merit-Aid "Arms Race"

February 13, 2020
 
 

A report from New America calls for federal intervention on the enrollment management industry to stop what it refers to as the "merit-aid arms race."

The report by Stephen Burd, senior higher education writer and editor at the D.C. think tank, found that public four-year institutions have spent at least $32 billion in financial aid dollars between 2001 and 2017 on students who lack financial need.

The organization's analysis found that more than half of the 339 public universities examined doubled the amount they spent on non-need-based aid between 2001 and 2017, after adjusting for inflation. Regional state colleges were actually found to devote even more of their institutional aid funds to non-needy students than public flagships.

Today, out of the 339 public universities, the University of Alabama spends the most -- about $136 million of its financial aid budget -- on students who aren't needy.

Burd blames the "dramatic" transformation of admissions and financial aid practices at many public universities over the past few decades. Because of state disinvestment and the desire to rank high on national lists, colleges have turned to enrollment management strategies typically found at private colleges. Consultants and firms, Burd writes, have steered colleges toward increasing tuition costs and then providing discounts to affluent out-of-state students with decent test scores, as well as the "brightest" in-state students, who are often also privileged.

The more that colleges do this, the more difficult it is for other colleges to resist these practices, Burd claims.

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