Examining the Merit of Merit Aid

On its surface, merit aid for college is an appealing concept to most parents, especially those who are Moms and Dads of high-achieving students.But questions and objections start to arise with attempts at implementation of merit aid, as colleges try to ensure that available money fairly gets into the hands of students who most deserve it.

On its surface, merit aid for college is an appealing concept to most parents, especially those who are Moms and Dads of high-achieving students.

But questions and objections start to arise with attempts at implementation of merit aid, as colleges try to ensure that available money fairly gets into the hands of students who most deserve it.

Today’s column endeavors to define for you what merit aid is, where it is utilized, how it is typically disbursed, who tends to receive it and why it appears to be losing momentum as colleges grapple with the concept and the practical difficulties of implementation.

Now, if I were to be cynical about merit aid, I could make a pretty good case that parent supporters and opponents of merit aid fall into two distinct camps: supporters of merit aid are those with children who are recipients of merit aid; and opponents of merit aid are the parents of all other students, the vast majority of young people who do not receive merit aid.

Despite my frustration with many things college-related, I am still not that cynical, and I hope you aren’t either.  Let’s both be skeptical, however, and together let’s dissect the what, where, how, who and why questions of merit aid.  Let’s ask:

  • WHAT is merit aid?  To answer that question, let’s start with what merit aid is not.  It is not need-based.  Instead, merit aid is based on a college’s subjective evaluation of a student’s admission credentials.  In its simplest terms, merit aid is most often awarded to a student with GPA and standardized test scores higher than the average accepted student at a particular school.
  • WHERE is merit aid available?  To be consistent with my first answer, I’ll start by delineating where merit aid is not available, and that includes a number of very different colleges.  First, merit aid is not available at America’s most selective schools, such as the Ivies, Duke, Northwestern, Stanford, etc.  At these schools, admission is need-blind and all financial aid is need-based, as the pool of applicants is so strong that it would be difficult, if not impossible, to single out certain applicants as deserving of merit aid.  Merit aid is also often not available at some state schools, which sometimes operate under government mandate to only make financial aid available based on strict need criteria.  Merit aid is often available at less selective private colleges and universities which aspire to be stronger in terms of their student bodies.  To be frank, it is used as an enrollment management tool at such schools, helping them to recruit stronger students who might otherwise wish to attend a more selective private school or a brand-name state school.
  • HOW are merit aid decisions made and how is the money disbursed?  Very mysteriously is the short answer to both of those questions.  While an individual student is, of course, the end beneficiary when merit aid is awarded, it is often for purposes of rounding out an entire class that merit aid is made available.  Schools want to have entering classes that include football quarterbacks, student government leaders, actors and actresses, marching band members, mathematicians and on and on, all the specialties that make up the various activities on campus.  As a result, school officials decide who should receive merit aid and how to disburse the funds based on enrollment management goals.  If a school has decided it is important to have a chamber orchestra, then it logically wants to have students who can make up that orchestra and it may be willing to “pay” for those musicians, not in hard cash, but instead in the form of a tuition discount.  This leads to the related question of. . .
  • WHO receives merit aid?  To be cynical for just a moment, the answer to that question is not necessarily the most meritorious students, but those who have outstanding – and usually very specialized – credentials and who happen to be in the right place at the right time.  In some cases, this specialized credential is an absolutely outrageous GPA and several really high standardized test scores, not just on the SAT, but also on multiple SAT II exams.  Again, however, if that student chooses to apply to Harvard or MIT, then he or she is literally a dime a dozen.  If he or she is debating whether to attend local private school X, however, then such aid may be available with an original offer of admission, or if a student makes clear to the admissions office that he/she would only attend that school if a significant amount of aid were to be made available.  This is not something that you can count on, however, as momentum is building among schools to stop using – or dangling – aid for such purposes.
  • So, WHY exactly is the tide turning on merit aid, with more and more schools deciding to go back to a purely or mostly need-based aid system?  The seeds to the answer to this question can best be seen in my answers to the previous four queries dealing with the what, where, how and who parts of merit aid.  As much as we parents would probably not wish to admit it, merit aid, for the most part, is really not merit aid at all.  It is tuition discounting, used sometimes sparingly, but sometimes on a widespread basis.  It gives a school cover to raise its tuition sticker price, which some families do indeed end up paying, in order to proudly claim a high percentage of students receive aid, and therefore also claim that the “net price” to families is much lower than the sticker price.  Merit aid used this way is bound to engender cynicism, especially among the large percentage of parents whose students are not among the fortunate recipients of such aid.  To put merit aid in employment terms, merit aid has too often become a “signing bonus” for a potential student that a school really wants to recruit. This policy results in aid funds  being less available or not available at all to current students who have risen to the occasion and performed well in college, after high school careers that perhaps were not as stellar.

Well, I know that was a lot of information to digest, but I’ve still only scratched the surface when it comes to the many questions related to merit aid.  Please Share Your Views on Merit Aid in Hoverings: A Blog for Current and Future College Parents located on the home page of www.collegeparents.org.  Please also pass on this column to other parents whom you think might be interested in becoming part of this merit aid debate.