College Scholarships for Rich Kids

Merit scholarships have always been controversial in higher-ed circles because many of these awards end up going to rich kids. A study just released by the Cornell Higher Education Research Institute suggests that college scholarship practices have led to lower numbers of minority and lower-income students on campuses.

This finding would refute the argument that many college administrators make that scholarships for wealthy students don’t jeopardize the chances for aid for poorer applicants. Those who make this argument suggest that giving a rich teenager a tuition discount will help other less fortunate students because the affluent student will still pay more than needy kids who require lots of financial aid.

The Cornell researchers concluded the use of merit scholarships dropped the number of lower-income students at selective and elite schools by 6%. The number of African-American students at these schools declined by 2%.

In reality, teenagers who earn merit scholarships probably aren’t going to care about who isn’t getting this money. It’s only understandable that any parents regardless of how much income they earn will want to grab the best financial deal possible.

That’s certainly motivated our decisions when my daughter, who is now a college junior, was looking for schools. It also will play a role in my son Ben’s decisions now that he’s a high school senior. Frankly, if Ben doesn’t get a merit scholarship, he’s not going to that school. My husband and I are definitely not rich, but we don’t qualify for need-based aid. We have no interest in paying full price and subsidizing somebody else’s luckier kid.

There are consequences, however, at schools that dole out merit awards to affluent students, who are largely sought after because they bring with them higher SAT test scores. According to the researchers, here are a couple of consequences of merit scholarship policies:

  • Top-tier colleges spend less on faculty salaries which can lead to higher turnover and difficulty recruiting high quality faculty. The salaries of associate professors at middle-tier schools rises.
  • At middle and bottom-tier schools, the introduction of merit scholarships increased tuition by about 7%.

The Cornell findings are important because most private colleges and universities today awards merit scholarships. In fact, there are probably only three dozen or so private elite institutions that only dispense aid based on need.

You can learn more about shrinking the cost of a bachelor’s degree by reading my book, The College Solution. Lynn O’Shaughnessy

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