Should Rich Students Get Merit Scholarships?

Should colleges continue to give merit scholarships to rich students?

The vast majority of colleges and universities in this country dispense money to rich kids through merit scholarships or grants. The higher-ed world isn’t proud of this practice, but it’s pervasive.

I ended up talking about this phenomenon this weekend when I was visiting my daughter Caitlin, who is a senior at Juniata College in Huntingdon, PA. My husband and I were in attendance for senior day for the women’s soccer team, which was playing Catholic University. My daughter is a forward and leading scorer on the team.

I was chatting with the mom of one of Caitlin’s teammates, who happens to be a professor at Franklin & Marshall College in Lancaster, PA. She was telling me that the F&M is focused on ending merit scholarships for well-off students and instead reserving its money to students who truly need financial assistance.  The mom observed that affluent parents wouldn’t like this policy, but that it’s the right thing to do and would lead to a better student body.

I mentioned the conversation on Sunday morning with Tom Kepple, Juniata’s president, who I met for coffee.  We both agreed that it would be extremely hard for any college to pull this off.

Why Rich Students Get Merit Scholarships

Here’s why:  The higher-ed world is one of the most competitive industries in the country. Very few parents are willing to pay full price for any college. In fact, there are only a few dozen colleges in the country that can charge full fare to affluent families. And the schools in this category are the Ivy League universities and schools that share their orbit. They can charge full price because they can get away with it.

For all other institutions, it’s a dogfight attracting promising teenagers. Rivals institutions compete by offering coveted applicants attractive financial aid and merit aid packages. If Franklin & Marshall stops giving its well-off students merit money, these kids could still qualify for money at schools like Dickinson, Muhlenberg, Ursinus, and other peer institutions.

What Should Happen to Merit Scholarships

Here’s what I’d like to see happen:  Every college and university in the country would drop merit aid for affluent kids. But the schools would also simultaneously reduce their tuition. One of the reasons why tuition is high at private colleges is because they have to reserve a chunk of their tuition revenue to dispense merit money to students who don’t appear to need it. If there was no merit bait, the prices could be more reasonable for everyone.

I know in my own case, my children were not going to any school that didn’t offer them money, Colleges are way too expensive to pay full price and we couldn’t afford it anyway. My daughter got accepted to Franklin & Marshall back in 2007 and it was  a school high on her list. F&M, however, didn’t give Caitlin a price break so she crossed the school off her list.

Merit Aid Prognosis

Looking forward, what are the chances that merit aid will disappear for the most fortunate college-going students?

When I asked Kepple, he laughed. Zero chance, he said.

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  1. I find it disturbing that the whole picture is never told as it pertains to financial aid.

    If we look at the housing bubble we can see many similarities to an impending college bubble.

    When my grandparents were applying to college about 26% of families were going to college. Summer jobs typically could fund the majority of the costs. Today the number is around 76% who attend college or some form of Higher Education. What has made this possible.

    Does this sound familiar. Liar loans/ No documentation loans and more and more people getting homes.

    Since the helpful US Government has stepped in many more students have attended college. At what cost?

    School price increases outpace inflation annually and as a result many of the students are up to their eyeballs in debt. Debt that does not go away in the event of a bankruptcy. Students come out of college paying off debt into their thirties. Most would be foreclosed on if there were such a thing for student debt.

    Sound Familiar?

    So where does all of this tuition go?

    Stadiums, workout facilities, common areas, etc. The point is that we have created country club colleges all over the country. College has become an entitlement. Everyone should have a college experience. I believe everyone should get in, get an education, and get out.
    Apparently I am in the minority.

    Colleges with tens of billions in their endowments and we are trying to take more from families; REALLY?

    Our taxes get funneled to the colleges and they decide if they want to offer us aid with our own money. What a fabulous system.

    How about no government intervention and the cost of college plummets back to 10-25,000 per year?

    As the student population continues to decline over the next decade it will be nice to see schools treating families fairly again. The student population will drop 1/2 – 2/3 in a short time frame. Another boomer effect we often forget about.

    I hope this opposing viewpoint causes everyone to stop and think for a moment.


  2. I support the goal of financial aid, it is necessary to make this available to less privileged families first and foremost. However i feel that the scholarship opportunities for students from wealthy backgrounds should be much more abundant. As sonja touched on, being wealthy does not mean that you can live without paying attention to your finances. Higher taxes and increased ability/need to help the less fortunate within your family, your community, and at times the world means that a huge salary does not go straight into a savings account. As a college student, watching my father write $28,000 checks each semester for my education bothers me because our ability to “afford tuition” is treated more as an obligation. Also, it is my family, not me the student that is wealthy. I would like to be able to contribute to paying my tuition and the scholarship opportunities for me to pursue this are extremely limited. There should be a higher number of scholarships that truly reward ambition, work ethic, and character without being ‘secretly’ motivated by race and financial background.

  3. Being considered a “wealthy” mom, I would have to disagree with you. Wealth, as determined by the FAFSA, is based on a family’s income level, not their assets or true wealth. And, many high income families also have high expenses – elderly parents to support, the parent’s own student loans, larger families and multiple children in college. Putting our two older children through college at full prices wiped out any savings we had, and both we and our children had to take out loans – and we still have two more children to put through college. If the kid’s are high academic achievers who are also involved in their communities and extracurriculars, then why should they be penalized for their parent’s success? If their efforts have earned them a scholarship, they should receive it regardless of the parents’ incomes.