Private Colleges Giving More Financial Aid to Wealthy Students

Article excerpt

EVERY year, college gets more expensive. But while policy makers focus on Pell grants and student loans, another important form of student financial assistance has received less scrutiny: aid provided directly by individual colleges and universities. Traditionally, these grants were based primarily on students' financial need. But in recent years, many colleges and universities--particularly private institutions--have been giving more aid to their wealthiest undergraduates, students who wouldn't qualify for aid under most need-based formulas. Why? Because even after taking into account the cost of the aid, these students still provide institutions with more net revenue than their low-income peers.

According to the National Postsecondary Student Aid Study, private institutions gave financial aid to about half (53%) of students in the lowest income quartile in 1993. That number has held fairly steady, rising only 9 percentage points by 2004. But for students in the highest quartile, the percentage receiving aid jumped by 23 percentage points, from 35% to 58% (Figure 1).

Moreover, the amount of money received by high-in-come students rose faster as well. In 1992-93, low- and high-income students received the same average award, roughly $5,500. But by 2004, awards had jumped by $2,100 for students in the highest income quartile, compared to only a $1,500 increase for students in the lowest.

Income Quartile  Average Amount Of Awards 2003-04

Lowest           $7,085
Middle           $7,768
Highest          $7,567

Public institutions are going the same way, with the biggest increases awarded to the wealthiest students, although the trend is less pronounced than in the private sector. …