Increasing college merit aid decreases enrollment of minority and low-income students

by Grace

A recently released report, Undermining Pell from the New America Foundation, charges that colleges are turning their backs on low-income students as they compete for top students with increasingly generous merit-based aid.

To increase their standing on college rankings, more private colleges are giving “merit aid” to top students, who are often affluent, while charging unaffordable prices to the needy, according to the report. The percentage of students receiving merit aid jumped to 44 percent in 2007-2008 from 24 percent in 1995-1996, the report found. To a lesser extent, public universities are using some of the same practices, Burd said.


Increasing merit aid correlates with decreasing minority enrollment.

The report cites other research, including “Keeping up With the Joneses: Institutional Changes Following the Adoption of a Merit Aid Policy” by Amanda L. Griffith.

“It is worrisome, given the already low levels of representation of low-income and minority students at four-year colleges, to find that the introduction of a merit aid policy is associated with a decrease in the percentage of low-income and black students, particularly at the more selective institutions in the sample.”

More federal involvement is recommended.

The New America Foundation proposes a federal “carrot-and-stick” solution.  The carrot would be a Pell bonus program aimed at schools serving high percentages of low-income students, increasing benefits to the neediest students with additional funds and programs.  And the stick would be  a requirement that wealthier schools match a portion of the Pell funds they receive and use these resources to support low-income students.

An opposing view comes from Michael Petrilli, who argues that Pell Grants should not be used to pay for remedial college courses.

 … A huge proportion of this $40 billion annual federal investment is flowing to people who simply aren’t prepared to do college-level work. And this is perverting higher education’s mission, suppressing completion rates and warping the country’s K-12 system.


4 Comments to “Increasing college merit aid decreases enrollment of minority and low-income students”

  1. I’m trying to resolve the discrepancies between your two recent posts on merit aid. It seems like more students are getting merit aid, but the total merit aid is going down. That sound like they are spreading the money much thinner than before, so the top students can expect only tiny amounts of merit aid.


  2. These charts show that a higher percentage of students are receiving merit aid, and the top chart on page 8 of the following link shows average merit aid amount has increased from $4,859 in 2008-09 to $6,355 in 2012-13.

    Click to access howamericapays2013.pdf


  3. The chart on page 8 does not distinguish between merit aid and need aid. It lumps them together as “grants and scholarships”. On page 10 it says “Within this category, however, there has been some shifting between grants and scholarships. In 2013, scholarships covered 16 percent of costs and grants covered 14 percent, a reversal of 2012, when grants paid 16 percent of costs and scholarships paid 13 percent,” which does support your claim that merit-based aid (scholarships) is increasing this year (but they don’t compare to 2008–09, only to 2012).

    If we look at Table 1a on page 18, we can see that the average grant aid in 2013 is $2942, and the average scholarship aid is $3256, while in 2009 grants averages $1533 and scholarships $2763. So both grants and scholarships have increased (I don’t think they corrected for inflation, though), but grants have increased more (+92%) than scholarships (+18%). When you consider that scholarships includes all the athletic scholarships, I don’t think you can make the case for real increases in merit aid.


  4. You’re right about those tables — they don’t distinguish between grants and scholarships. However, after looking at this again, I can’t say it’s clear to me that all funds included under “grants” are based solely on need. The terminology can be vague. The CollegeBoard, for instance, categorizes financial aid grants as either “meeting need” or “beyond need”, the latter clearly being a type of merit aid. In any case, you raise good points about these numbers.

    Other sources report increases in merit aid. Here’s one example:

    “The shifts in aid in the last 15-20 years have been unmistakable. In 1995-96, private nonprofit and public four-year colleges were far likelier to give need-based grants than merit-based ones (by margins of 43 vs. 24 percent at private nonprofit colleges and 13 percent vs. 8 percent at public universities). In 2007-8, 18 percent of public university students received merit-based awards and 16 percent received need-based grants; at private colleges, 42 percent received merit aid and 44 percent received need-based assistance, a 2011 study by the National Center for Education Statistics showed.”

    I’ll continue to look for information about these trends, and as usual I welcome any news from you and all my readers.


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