Diverting Financial Support
Aid programs increasingly are aimed at more affluent students
By Michael S. McPherson and Morton Schapiro
FOR MORE THAN 30 YEARS, the system for financing
undergraduate education in the United States
has been based on the principle that
colleges and universities, together with federal
and state governments, should help financially
needy students to pay for their education.
Now, however, institutions increasingly are inclined to use financial aid
to recruit the most-desirable students, and governments are shifting
resources from lower-income students to the children of middle-class
taxpayers, who have more political clout. Those changes threaten the
educational prospects of our
neediest young people, and
the health and stability of
U.S. higher education in
general.
The present system of
meeting families’ need for
financial aid had its origins
in an enrollment slump in
the mid-1950s, which followed
the influx of Korean
War veterans supported by
the GI Bill. With enrollments
declining, a number
of prestigious colleges and
universities found themselves
slipping into bidding
wars for attractive students—just as is happening today.
In 1954, driven by the desire to stem the flow of dollars to competitive
offers of student aid, as well as by a commitment to increase access to
higher education, a group of institutions formed the College Scholarship
Service as part of the College Board. The goal of the CSS was to develop
a uniform and objective way of assessing financial need. The assumption was that, ideally,
institutional and governmental programs would meet that need
Although colleges, government agencies and individual students have had their
disagreements about how to measure a family’s ability to pay for higher education, the
consensus among everyone involved has been that trying to meet financial need is the right
thing to do. That consensus is now breaking down.
The federal tuition tax credits introduced in 1998, aimed squarely at the middle class,
cost the government more money than the entire need-based Pell Grant program. Many
states seem more interested in merit
scholarships and tax-exempt, prepaid-tuition
plans than in grants for citizens with lower incomes.
And colleges and universities themselves
increasingly are turning their backs on
the principle of meeting financial need as
they adopt programs, such as merit aid, that
are aimed mainly at more-affluent students.
In the past few years, our most prestigious
universities have been leapfrogging each
other as they modify their aid systems to lure
the students they want. Even Harvard University
characterized its need-based aid program
as “competitively supportive,” and
invited applicants to seek a response from
Harvard to offers of aid from other leading
institutions. It’s no wonder that students’ families, feeling that the aid system can be and
often is manipulated, are less and less inclined to play by its official rules
The resulting free-for-all, with institutions competing for students and students trying to
play one institution off against another, tends to divert financial support from very needy
families toward middle- and upper-income students. It is increasingly clear that,
unchecked, that trend will lead to growing stratification in U.S. higher education, and
increasing inequality of income and opportunity in society at large.
How can we reverse the trend? We need to undertake a national effort to restore the
commitment of colleges and governments to the principle of meeting students’ financial
need. Specifically, we should urge Congress to pass a law affirming that colleges can enter
into agreements to apply common standards in assessing need and awarding aid without
running afoul of antitrust laws. We also should urge the federal government to create a
supplemental student aid program that would provide extra funds to students whose
colleges adhere to need-based principles in awarding student aid.
The real question is whether the United States possesses the will to pursue such a
course. The principle of equal access to higher education which Americans continue to
espouse, and which has served the country well over the past 30 years is increasingly
honored only in principle while being abandoned in practice. The fate of future generations
of young people depends on our reversing that trend.
