At Private Colleges, Share of Aid Going to Wealthy Students Increased in 1990s, Analyst Says By DAVID GLENN
Students from wealthy families received much more financial aid from private colleges and universities in 2000 than they did in 1993, according to a short policy paper that was posted this week on the Web site of Education Sector, a new Washington-based think tank. The aid offered to students from low-income families, meanwhile, remained relatively stagnant, the paper says.
"This is a very significant trend, and it's something that I think the public really is not aware of," Kevin Carey, the think tank's research and policy manager, said in an interview on Wednesday.
Mr. Carey said he worried that some institutions had become dependent on using merit-aid grants as they engaged in bidding wars for affluent, high-achieving students whose presence raises colleges' standing in popular magazine rankings. In so doing, he said, colleges are failing to use their financial-aid resources in ways that would maximize access for low-income students.
Asked to comment on the findings, a member of a high-level U.S. Education Department commission on higher education said the panel probably would recommend action to deal with this worrisome trend.
Mr. Carey's policy brief <http://www.educationsector.org/analysis/analysis_show.htm?doc_id=336982> is based on data from a table in "The Condition of Education 2004," a report released two years ago by the Department of Education.
According to the federal data, wealthy students gained both relatively and in absolute terms from 1993 to 2000. (The figures apply only to four-year, nonprofit private colleges and universities, and they apply only to financial aid offered by the colleges themselves. They do not include student loans or grants provided by the federal government.)
In 1993 only 35 percent of the wealthy students at four-year private institutions in the United States -- "wealthy" meaning students whose parents' income was in the highest quartile -- received financial-aid packages from their colleges. By 2000 that proportion had risen to 51.2 percent. The proportion of low-income students who received aid -- "low income" meaning students whose parents' income was in the lowest quartile -- increased much more slowly over the same period, from 52.8 percent to 55.7 percent.
In 1993 the average size of an institutional grant was the same for both low-income and high-income students: $5,500. But in 2000 the average grant given to high-income students was $6,800, while the average grant given to low-income students was only $6,200. (All figures are adjusted for inflation.)
Catharine B. Hill, a professor of economics at Williams College who will become president of Vassar College in July, said in an interview on Thursday that the trend toward merit aid is real, and that some aspects of it are troubling. "The aggregate data certainly support the idea that more schools are shifting toward merit aid, which is going to higher-income students," she said. "There has been a search for competitive advantage."
She added, however, that her own research suggests that the country's most selective colleges moved in the other direction during the 1990s. In her studies of 28 elite colleges, she has found that almost all of them have offered increased aid to low-income students since 1990, and that the absolute number of low-income students has increased at those colleges.
It is among the slightly less selective colleges, Ms. Hill suggested, that the pressure to move up in the rankings has propelled an increase in merit-based aid. She said that she was cautiously optimistic, however, that those colleges will change their policies over time. "The whole discussion of access for low-income kids has hit the national level," she said.
Richard K. Vedder, a professor of economics at Ohio University who is a member of the Education Department's Commission on the Future of Higher Education (The Chronicle, October 14), said in an interview on Thursday that he had mixed feelings about merit aid.
"On the one hand, I think rewarding academic excellence is good and fine," he said.
On the other hand, Mr. Vedder said he was uncomfortable with colleges' bidding wars for high-achieving, affluent students. "It seems to me that giving money to a kid whose SAT is 1500 as opposed to a kid whose SAT is 1400 is probably, from a broader public-policy point of view, not the greatest thing in the world," he said. "We really ought to be worried about getting the kid with a 1400 SAT from a low-income family into college."
Mr. Vedder suggested that the commission will probably recommend new public policies that would encourage colleges to move away from merit aid and toward need-based aid.
"There are things that could be done with the tax system," he said. "Should we continue to allow people to take tax deductions for giving scholarships to yuppie universities that cost $40,000 a year, where the recipients of those scholarships come from families whose income exceeds $100,000? This is like the question of allowing tax deductions for paying country-club dues. It's not quite at that level, but it's similar. I think some new restrictions on tax deductions ought to be considered."
Mr. Vedder also suggested that the federal government might consider creating a new tax credit for people who donate money for scholarships that are specifically earmarked for low-income students.
"Another approach would be to go after the institutions themselves," he said. "Maybe we should make their tax status contingent on their scholarship aid going along a need-based basis."
Mr. Vedder emphasized that he was speaking only for himself, and said that the commission, which is scheduled to hold hearings next month in two Western states, had not yet discussed such issues in any detail.
Nonetheless, he said, "I think the goal of increasing need-based aid relative to merit-based aid is widely accepted by a large proportion of the members of the commission. I would be a little surprised if we don't have some recommendations along those lines before the summer is out."
The full text of the federal report, "The Condition of Education 2004," can be downloaded from the Web site of the National Center for Education Statistics <http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004077>. The data used in Mr. Carey's paper are from Table 37-2, in an appendix to the report <http://nces.ed.gov/pubs2004/2004077_App1.pdf>.