The provision of need-based financial aid, at a need-blind school, may be frustrating sometimes in its outcome, but at least it is fairly easy to understand for parents and straightforward to administer for the college or university.

Consider this need-blind school scenario for three prospective freshmen: Student A is accepted, she and her parents have researched the costs of attendance and the likelihood of her receiving financial aid, they have determined such aid is unlikely and they are right. Student B also meets the school’s credential requirements and is accepted, the parents have reluctantly agreed to consider the school but hope for some financial aid, they have filled out the necessary forms (including the all-important FAFSA) and, in the end, they also are right, as partial aid is offered as part of acceptance. Student C has the best on-paper credentials of all three applicants, but her six-figure-income parents have been mistakenly led to believe that financial aid will be offered to their high-achieving daughter, and they are wrong.

Every financial aid decision, at any school, can be appealed, but I imagine that the decisions made at the need-blind schools tend to withstand greater scrutiny. After all, it’s simply about numbers. The need-blind school generally has the luxury of being extremely selective, with an applicant pool so strong that one student who says “no” to an admissions offer can generally be “replaced” by someone on the waiting list who is just as qualified for entry and just as likely to succeed.

In the above scenario, the school knows that Student A probably has lots of choices. Since cost appears not to be an issue for her family, then it is likely that she applied to several highly selective private schools, along with a few safety schools, such as the flagship public university in her home state. Student A may attend the need-blind school, or she may not. Some wooing of her may be in order by the college, but it will probably occur only if she has some special non-academic skill that will help to round out the class of incoming students. The wooing, if it happens at all, does not involve the dangling of financial aid dollars.

Additional dollars are likely not dangled for Student B either, as the school’s financial aid office has already put a lot of thought into the original package that was offered. If the system works right, then Student B was probably judged to need at least some financial aid to attend any college, and offered more aid for her private school choices than for her public ones, thereby leveling the playing field, at least on the margins.

And what of Student C? Under the scenario I have painted, she is highly likely, with the support or urging of her family, to attend the flagship or other well-known public university in her state, assuming that school was one of her application choices. I make that assumption because I have already described the family as thinking they are eligible for aid, but ultimately judged not to need it. The selective private school is likely to be a financial stretch, indeed even a burden, causing the family to consider taking wrongheaded steps such as the stoppage of funding for or the raiding of dollars already set aside for retirement.

The point of describing these three scenarios is to show you that decisions based on need alone – at schools with need-blind admissions – are fraught with all sorts of assumptions and unintended consequences. Imagine the greater uncertainty that is caused when merit-based aid is thrown into the mix. Understandably, many in higher education are in favor of merit-based aid and, in some states, it has worked remarkably well as an economic development tool. In next week’s column, I will take a close look at the impact of merit aid and offer a judgment on what role that merit aid should play in the financial aid mix.

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