Lexington, KY - Imagine that you are a college admission dean charged with enrolling a freshman class. Your goals are attracting a certain number of students, achieving targets for quality measures such as GPA and ACT, factoring in diversity, and doing all of this within a prescribed budget.
Now imagine that you're a hiring official for a large company. Certain jobs require special skills or characteristics, and the candidates you want may have plenty of other choices. You, too, have targets to meet and a budget to consider.
How do you meet your goals, drawing the candidates you want to your college or company? Show them the money. If you're a hiring official, you may offer a higher salary or put together a benefits package that provides greater remuneration. If you're an admission dean, you'll probably offer scholarships.
Money vs. parking
John Thelin, university research professor of educational policy studies at the University of Kentucky, says that merit scholarships at state universities have gained momentum as universities seek higher quality students (and, perhaps, higher rankings).
"How do you gain an edge that would make a flagship state university more attractive or equally important in the search for talent?" Thelin asked.
Money and resources provide the means to desired ends: Just about any university will pay a high salary to attract a Nobel Laureate. And at the University of California-Berkeley, Thelin noted, the way to get access to the most coveted parking on campus (on a campus where parking is notoriously difficult) is to win a Nobel Prize.
Undergraduate students may be motivated by parking to some degree, but merit scholarships reducing their tuition costs provide a much greater incentive to students and their parents. According to figures provided by Don Witt, vice provost for enrollment management at UK, the budget for undergraduate merit scholarships increased by 29 percent from academic year 2007-08 to last year, 2010-11. This year's freshman class is the strongest on record, as measured by GPA and ACT scores.
"The scholarships are helping us attract and enroll well-prepared students," Witt said proudly.
Family expectations are changing
The retail industry has inadvertently conditioned shoppers to wait for sales, and now it's the rare individual who routinely pays full price for merchandise. With the rise of merit scholarship use at colleges nationwide, Brad Goan, vice president of enrollment at Transylvania University, sees families' expectations about contributing to college costs heading in the same direction. Discussing interactions with students and parents, he said, "There's something of an entitlement philosophy that has crept into these conversations that wasn't there, except among the very best students, 10-15 years ago."
Transylvania has a financial aid award system that interweaves need-based aid with merit-based aid, to make Transylvania accessible for the largest number of students. Contrary to assumptions that private colleges are off-limits to all but the wealthiest, Goan said that almost 25 percent of Transylvania's students receive Pell grants (indicating limited economic means) and 35 percent of Transylvania's students are first-generation college attendees.
There are compelling arguments to be made for funneling all financial aid to students with demonstrated financial need. Yet without merit scholarships, colleges might lose the middle class. Why? Students from middle-class backgrounds may not qualify for a lot of need-based aid; their families' assets may not be liquid; and reduction in real income is hitting families at every economic level.
Transylvania's approach to merit-based aid is similar to that of many private colleges nationwide: if a student is a star in a college's applicant pool, rather than part of the broad midsection, the college wants to provide a financial incentive to enroll. Conversely, low performers who are just barely admissible and have a high level of financial need may receive far less tempting financial aid offers.
Philosophical struggle
Goan, Witt and Thelin agree that trying to achieve balance between merit- and need-based financial aid, in order to make college attendance affordable for the greatest number, is both highly desirable and exceedingly difficult.
Thelin asked, "If you give a scholarship to a young woman or young man who comes from a family that earns $500,000 a year, what have you accomplished?"
This really is a zero-sum game: Dollars directed toward merit funding are not available for need-based financial aid (or for other institutional priorities).
A handful of august institutions in this country, all heavily endowed and highly competitive for admission, award financial aid solely on the basis of need. They constitute a very small group, operating outside of today's college admission norms.
Thus, unilateral disarmament isn't a realistic choice in today's world of college admissions. As Witt said, "It's a very competitive environment Ö as long as there are institutions throughout the country that are using merit scholarships, it's a part of what we're having to do."
Goan echoed the sentiment, saying that there's been much conversation at Transylvania about meeting full demonstrated financial need for every student, which they're not currently able to do consistently. If the "demand curve" for Transylvania doesn't change and the economy doesn't improve, more merit-based aid could be in store; if both improve, however, Transylvania may be able to reduce merit-based aid outflow.
In the meantime, families evaluating college costs should be aware that plenty of merit- and need-based assistance is available at both public and private institutions. And the stronger a student appears in the applicant pool, the greater the likelihood that the admission offer he or she receives will be affordable.
Jane S. Shropshire guides students and families through the college search process and is Business Lexington's Higher Ed Matters columnist. Contact her at Jshrop@att.net.