Richer Students Receive Much More Merit-Based Aid Than Do Poorer Ones, Study Finds

Chronicle of Higher Education 1/17/07

By Elizabeth Farrell

Merit scholarships are disproportionately awarded to students from high-income families, and the percentage of merit aid colleges give out, compared to need-based aid, has increased significantly since 1994, according to report scheduled for release today.

From 1994 to 2004, students from families in the top-income quartile ($111,170 or higher annually) received three times as much merit aid as students in the lowest income quartile ($37,745 or less). Families in the lowest quartile spend 58 percent of their income on the net price of college, compared with 12 percent of income for families in the highest income group, according to the report, which was issued by Eduventures, an education-consulting company.

During the same 10-year span, the proportion of merit aid to total grant aid distributed increased from 6 percent to 16 percent. The total amount of financial aid awarded from federal, state, and institutional grants reached $39-billion in 2004, compared with a total of $7-billion in merit aid.

The distribution of need-based and merit aid varied depending on the type of institution. Public institutions that cost $16,819 to $28,828 a year had the smallest difference between their tuition discounts for merit compared with need. Private institutions that cost more than $28,828 provided the highest proportion of need-based aid, and used merit aid only sparingly, according to the study.

Other findings in the report reinforce the assumption that the "line is blurring" between need-based and non-need-based aid. As students' SAT scores rise, so do their awards of need-based aid. Students in the lowest income quartile who scored at or below 1140 on the SAT received, on average, $8,403 in financial aid, while the mean award for students with the same family income who scored at or above 1261 was $10,820.

The data suggest, according to the report, that "need-based awards may be used, in part, as a recruiting mechanism to attract students of relatively higher academic profiles."

Differences in merit aid are particularly striking between students who scored very high on the SAT and those who got a perfect or almost-perfect score. The average merit-based award for students who earned a 1560 was $7,500, compared with a mean award in excess of $20,000 for students who scored above that.

The report is based on a study that surveyed 20,000 students at eight public institutions and two private ones. It is available only to Eduventures clients.