Financial Aid Gets An 'F'

Soldiers of the Scottish 1st Battalion Highlanders lower the coffin of a World War 1 soldier at a cemetery in Ypres, Belgium, in this Oct. 21, 2004. AP (file)

This column from The American Prospect was written by Robert B. Reich.
If your child gets a fat envelope from the college of his or her choice this week, watch your wallet. Deposits are due May 1, and tuition and fees are up by double digits again. Colleges say they can't help it. Their health care and energy costs are still soaring. Endowments are still depressed. And state governments are still cutting back subsidies.

But how can families afford it -- especially if their jobs and wages are precarious? Most families in the bottom half, earning under around $55,000 this year, are already deep in debt. They'll try to pile on college loans, but there's a limit. Moody's, the investment service, says the number of parents seeking to postpone tuition-loan repayments has doubled over the past year.

This means that for many young people who are perfectly qualified to attend college, but whose families have been hit by falling wages and job losses, the difference between going and not going depends on how much scholarship aid they get.

But here's the odd thing: Most scholarship aid is going to young people based not on their need but on their star power -- their high-school grades and college boards. That's a major reversal. As recently as the late 1990s, most college aid was based on need.

You'd think that in this time of soaring tuitions and drooping paychecks, need would come first. Why should kids from wealthier families who don't need scholarship aid but score well in standardized tests be getting most of it?

The reason why colleges are shifting more scholarship money to academic stars is because colleges are competing against each other ever more intensely. This makes them extremely sensitive to their ranking on the US News and World Report's annual poll of colleges and universities. That ranking -- which is supposed to measure the quality of the education they provide -- is based partly on the grade point averages and college board scores of their entering freshmen. So the more student stars colleges can attract, the higher their ranking. That's a big incentive for them to use scholarship aid to attract non-needy stars instead of needy non-stars.

From the standpoint of society as a whole, this is absurd. When a college education is the most important road to upward mobility, and when the gap between the have-mores and have-lesses is wider than it's been in a century, the last thing we should do is make it harder for qualified kids from poorer families to attend college.

How do we get colleges to offer more scholarship aid based on need and less on merit? Here's one idea: Change the incentives now pushing colleges to attract non-needy stars. U.S. News and World Report should make their college rankings depend partly on the percent of entering freshmen from families whose income is below the median. That means that colleges with a higher percent of low-income freshmen would get extra points.

This makes sense on several grounds. Colleges with a more economically diverse student body not only educate a broader cross-section of America, but also expose their students to a wider range of experiences and perspectives. That's good for the students. It's also good for America.


Robert B. Reich is co-founder of The American Prospect. A version of this column originally appeared on Marketplace.



By Robert B. Reich
Reprinted with permission from The American Prospect, 5 Broad Street, Boston, MA 02109. All rights reserved
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