Playing the Merit Aid Game at Public Universities

Only a small number of private nonprofit colleges are using their financial aid resources to make college more accessible and affordable for the neediest students. Instead, most are charging students with family incomes of $30,000 or less a net price exceeding $10,000.

The news is better in the public higher education sector. About 60 percent of public four-year colleges continue to enroll a substantial share of low-income students and charge them a manageable net price.

But don’t be fooled. The merit aid arms race is raging at a large number of public colleges and universities. State disinvestment and institutional status-seeking are working together, hand in hand, to encourage an increasing number of public institutions to adopt the enrollment tactics of their private-college counterparts – often to the detriment of the low-income students they enroll.

Of 598 public four-year colleges and universities examined in Undermining Pell Volume II, 235, or 39 percent, charge the lowest-income in-state students a net price over $10,000; and 35, or 6 percent, require these students to come up with $15,000 or more.

Oregon State’s Strategic Pursuit of High-Achieving Students

Many of the 235 public colleges that charge the lowest-income in-state students a net price over $10,000 are active participants in the institutional financial aid arms race. Oregon State University entered the fray in the late 1990s – and it did so with gusto.

In an interview with The Atlantic Monthly in 2005, Bob Bontrager, Oregon State’s head of enrollment management at the time, revealed the fervor with which he approached the job when he said of his competitors: “I personally prefer kicking their ass.” He explained, “It’s a zero-sum game. There are a finite number of prospective students out there. Are you going to get them or is your competitor going to get them?”

According to Bontrager, Oregon State took this aggressive approach out of necessity. From 1981 through 1996, the university saw its enrollment plunge from 17,700 to 13,800 students. At first, school officials were fairly complacent about these developments. “The prevailing thinking was that the high levels of name recognition and legacy predisposition would shield the university from continued enrollment declines,” Bontrager wrote in an essay on the subject for the American Association of Collegiate Registrars and Admissions Officers (AACRAO) in 2003.

But by the mid-1990s, university officials realized that “significant action was needed to address the ‘enrollment problem’ ” and to “enhance net revenue” at a time when state appropriations were falling. Among other things, the university began to use its institutional aid dollars more strategically – creating merit scholarship programs to attract students to the school.

The new approach worked. Enrollments not only began to grow again but started to break previous records. “We now find ourselves in a completely different posture with regard to enrollment,” Bontrager wrote. “We have gone from enrolling as many qualified students as possible to facing the full range of enrollment issues, including consideration of the physical and program capacity of the campus as well as of the desired composition of the student body based on residency, ethnicity, academic credentials, and other characteristics. In short, we put ourselves in a position of truly managing our enrollment rather than just seeking to increase aggregate numbers.”

Although Bontrager left Oregon State in 2006, the university has continued its aggressive enrollment management approach. In fact, it has doubled-down on its recruiting efforts as it pursues a goal that its president, Edward J. Ray, has set for the institution: to become a top 10 land-grant institution, a set of schools, including many public flagship universities, that have a mission to provide a broad and accessible education to the citizens of their states. As part of this effort, Ray has vowed that by 2025, at least half of the incoming class will be made up of top students.

According to Oregon State officials, the population of high-achieving students (those who have a GPA of at least 3.75) has grown in recent years to represent more than a third of entering students each year. To achieve the president’s goal, university administrators have drawn up an “Executive Engagement Plan” that calls on the enrollment management office to “fully engage all OSU deans and college administrators and faculty as active participants and on-going partners in the high-touch recruitment and enrollment of high achieving students.” It also calls on the university to “provide sufficient on-going scholarships and financial assistance to successfully and robustly recruit and admit high-achieving students.” The university has, in fact, made financing merit scholarships a top goal of the final phase of the $1 billion capital campaign that it is carrying out now.

Currently, Oregon students with a GPA of at least 3.85 or SAT scores of 1900 and above are eligible for scholarships worth up to $8,000 a year, renewable for four years. Out-of state students with a GPA of at least 3.75 can receive up to $7,000 per year for four years. Both Oregon and out-of-state students with slightly lower grades and test scores are eligible for lesser awards.

Overall, in 2012-13, 19 percent of freshmen at Oregon State had no financial need and received merit aid, averaging about $4,000 a year.

With all the money Oregon State spends recruiting the best and the brightest, the university appears to have little left over for those with the greatest financial need. While Pell Grant recipients make up 34 percent of the school’s student body, the lowest-income Oregon students paid an average net price of $13,506 in 2011-12.

Still, with the university’s ambitions rising, it’s unlikely to change its focus anytime soon. “The growth among high-achieving students has helped OSU become known more publicly and accurately as the leading ‘university of choice’ for Oregon’s best and brightest high school graduates,” the university’s Enrollment Management Task Force boasted in 2012.

Using Merit Scholarships to Boost Enrollment at Wichita State

The use of strategic enrollment management by public colleges is not just being driven by the quest for prestige. Schools are also using these techniques to try to increase their revenue in the face of large-scale state budget cuts.

Such is the case at Wichita State University in Kansas, a state that has cut spending on higher education by about 23 percent since 2008. To make up for lost revenue the university plans to boost its enrollment by more than 7,000 students. This effort will require Wichita State to engage in “much more aggressive recruiting of freshmen both in-state and out-of-state,” according to John Bardo, the school’s president.

As a first step, the university spent $700,000 in 2013 to hire the enrollment management firm Royall & Company to help expand its reach outside Kansas. With the help of the company, the university is purchasing lists of names of hundreds of thousands of high school sophomores, juniors, and seniors that it can recruit nationwide. “The plan is to spend hundreds of thousands,” Bardo told The Wichita Eagle. “The payoff will be millions.”

The school has also restructured its scholarship program to make it more appealing to “academically talented students.” For the first time, students are automatically considered for merit scholarships upon admission to the university (instead of having to apply for them separately, as they’ve done in the past). And the scholarships are available for up to four years of school. Previously, students had to reapply for them each year.

Even before the changes took effect, Wichita State was generous with merit aid, providing scholarships averaging about $2,800 each to 36 percent of freshmen without financial need in 2011-12. The fact that the university is becoming even more strategic with its scholarships can’t be good news for the lowest-income in-state students, who paid an average net price of $13,166 that year.

“Our interest is in making sure we keep the best and brightest people in Wichita so that they become part of our long-term workforce,” Bardo stated. “The new plan also allows us to recruit bright new people from out of state who we can help become part of the community.”