Freebies for the Rich

Catherine Rampell:

Max Russell had always been a conscientious student, but when his father died during his junior year of high school, he had to take on a 25-hour-per-week job to help his family pay the bills. The gig inevitably ate into the time he spent on homework, and Russell's G.P.A. plummeted from 3.5 to 2.5, which complicated his ability to get the aid he needed to attend a four-year college. So he ended up at Ivy Tech Community College in Indianapolis. Last year, after finally qualifying for student loans and cobbling together some grant money, he transferred to Purdue University, one of the state's top public schools.

At Purdue, Russell reconnected with Christopher Bosma, a friend from high school. Bosma's family was considerably wealthier, but his entire tuition was free -- as will be medical-school costs. An outstanding high-school student, he received a prestigious merit scholarship that covered both. Russell told me that he believed the two friends are about "equivalent in intelligence" but acknowledged that Bosma studied much harder in high school. He was unusually driven, he said, but it probably didn't hurt that Bosma had the luxury of not having to help support his family.

Over the years, many state-university systems -- and even states themselves -- have shifted more of their financial aid away from students who need it toward those whose résumés merit it. The share of state aid that's not based on need has nearly tripled in the last two decades, to 29 percent per full-time student in 2010-11. The stated rationale, of course, is that merit scholarships motivate high-school achievement and keep talented students in state. The consequence, however, is that more aid is helping kids who need it less. Merit metrics like SAT scores tend to closely correlate with family income; about 1 in 5 students from households with income over $250,000 receives merit aid from his or her school. For families making less than $30,000, it's 1 in 10.

Schools don't seem to mind. After years of state-funding cuts, many recognize that wealthy students can bring in more money even after getting a discount. Raising the tuition and then offering a 25 percent scholarship to four wealthier kids who might otherwise have gone to private school generates more revenue than giving a free ride to one who truly needs it. Incidentally, enticing these students also helps boost a school's rankings. "The U.S. News rankings are based largely on the student inputs," said Donald Heller, dean of Michigan State University's College of Education. "The public universities in general, and the land grants in particular, are moving away from their historical mission to serve a broad swath of families across the state."

Posted by Jim Zellmer at September 25, 2013 1:20 AM
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