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Democratic presidential candidates have recently made splashes by promising to reduce college tuition. This follows on the footsteps of Germany’s decision to entirely eliminate tuition fees for every student, domestic and international, enrolled in German universities.

On the other hand. tuition rates at schools across the United States show no signs of detracting from their notorious upward trends. Indeed, since 1985, tuition fees at US institutions have skyrocketed by as much as 500%. As such, it is not unusual for private schools in the US to list their respective costs of attendance as being over $60,000 per year. Of course, most schools are quick to point out to prospective applicants that the vast majority of enrolled students do not pay the entirety of this prohibitively high sticker price; most students receive some sort of financial aid, need-based or otherwise.

Recently, however, it has come to light that a number of small, private colleges have been engaged in a sort of financial aid arms race by offering merit scholarships in ever-increasing numbers and award in order to attract applicants and boost enrollment. While this seems like a perfectly legitimate way for colleges to attract and hold on to the best and brightest, there is an unfortunate and often unmentioned other side of the coin: colleges have to come up with the money for those merit scholarships somehow. As it turns out, many colleges have raised the funds for these awards, which are not necessarily made out to students who need them, by raising tuition for everyone else.

As it turns out, this is causing unease even among college administrations engaged in this practice. At a recent meeting of private college presidents, the Chronicle of Higher Education reports that a document containing the following text was circulated among the attending administrators:

“We believe that ‘discounting’ has led to an allocation of financial aid resources that is neither efficient nor just and has contributed to the rising cost of higher education.

We believe that ‘merit financial aid’ as presently understood is, in fact, ‘non-need financial aid’… We believe that a financial model upon the traditional ‘high tuition/high discount’ approach to setting fees is unsustainable.”

For the record, the “high tuition/high discount” refers to a system in which tuition fees are inflated in order to raise funds for “non-need financial aid,” that is, merit scholarships and awards. In other words, this is a system that draws resources from every student and redistributes it to those who, while they may very well welcome it, do not necessarily need it.

In an interview with NPR, S. Georgia Nugent, president of Kenyon College, recounted an instance in which Kenyon admitted a student “[whom] we evaluated to have no financial need based on the assets of the family. The family then wrote back to us to tell us they had four other offers from other schools offering aid from $10,000 to $40,000.” And while Nugent went on to maintain that this particular revelation did not convince Kenyon to change its offer, bidding wars of this sort are common as schools try to court admitted students to boost matriculation rates.

It should not then come as a surprise that these practices are becoming prohibitively expensive. According to The Chronicle of Higher Education, at certain institutions, merit awards entail up to ~50% of the sticker price of attendance. These sticker prices are then, of course, inflated to account for the entirety of the student body in order to break even.

The alternative to current reality is somewhat disconcerting: basic arithmetic makes it so that if a college with a 50-percent discount enrolls only full-pay students and restrains itself from offering merit scholarships, it could reduce its sticker price by half.

Don’t get me wrong, it’s good that students are offered aid and a wide variety of choice in selecting the respective institutions in which they will eventually enroll. However, it should be recognized that the real victims of the aforementioned bidding wars are students who aren’t offered merit scholarships and cannot afford to attend college without financial aid.

At the end of the day, merit scholarships simply end up taking from the families of the academically less-qualified students and give to those who are more qualified, perhaps solely because the latter had access more resources, financial or otherwise, to begin with. And for institutions that purport to promote social and economic mobility, this is simply intolerable.

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