Merit Aid: Not Just for the Middle Class

Supporters of “merit aid” often defend it as being a middle class benefit. When articles appear that are critical of non-need-based financial aid, they are typically greeted with responses such as this (taken from a forum on College Confidential):

I think that it is ridiculous to cut merit aid. The middle class will be in even more of a bind. The only reason I will be able to afford to go to a good school is if I get merit aid. I'm in the typical middle class FA situation- too "rich" to get FA but too poor to afford college.

Newly-released data by the U.S. Department of Education's National Center for Education Statistics (NCES) show that a student’s chances of receiving merit aid increases as his or her family’s income rises. In fact, students from families making more than $250,000 a year are more likely to receive merit aid than those making less than half of that.

The data in question come from the latest edition of the National Postsecondary Student Aid Study (NPSAS), a nationwide survey of college students that the NCES conducts every four years. The survey provides the most comprehensive information available on how students and their families pay for college.

Overall, one in five students with family incomes of over $250,000 a year obtained merit aid from their colleges in the 2011-12 academic year. That’s compared to about one in seven students from families that make between $30,000 and $65,000, and one in six from families with annual incomes between $65,000 and $105,000.

These results are not entirely surprising. As I’ve written in the past, four-year colleges, both public and private, are increasingly using their institutional aid dollars to compete for students who can otherwise pay full freight. This strategy has been particularly appealing to public colleges and universities of late as a way to make up for declining support from their states.

Indiana University professor Donald Hossler, who served as IU’s vice chancellor for enrollment services for many years, recently explained this strategy to ProPublica. “One of my charges was to go after what I would call pretty good out-of state students,” he said. “Not valedictorians, not the top of the class. Students who you didn’t have to give thousands and thousands of dollars to in order to get them to enroll.”

It’s certainly true that students from middle-income families are benefiting from merit aid. But that shouldn’t obscure the fact that a significant share of recipients are coming from very wealthy families who can certainly afford to send their children to college without the help."