Substantial numbers of students cannot afford to attend college. A Congressional panel estimates that more than 4 million low- and middle-income students will not attend college for financial reasons during this decade (ACSFA, 2002). College tuition is rising as state appropriations are dropping. At the same time, more students are relying on loans, rather than grants, to help pay for college (Heller & Rogers, 2004). Yet, the recently released final budget plan for fiscal year 2005 includes no new money for federal need-based student aid (Burd, 2004). As Alicia Dowd (2003) notes:
with rising tuition and the declining value of need-based aid, there is evidence that low-income status is a significant barrier to college enrollment, even at community colleges, despite their open access tradition. The three primary barriers to enrollment are understood by policy analysts to be lack of financial aid, lack of information about available aid, and lack of college preparedness, (p. 107)
Studies on the efficacy of need-based aid-as opposed to aid based on grades, test scores, or a combination of the two (often called "merit-based" aid)-have recently been released. In addition to empirical research on which kind of financial aid improves recruitment and retention for low-income students, there are also a number of legal cases challenging merit-based aid. Opponents of merit-based aid argue that the seemingly neutral scholarship criteria (grades and test scores) in fact discriminate against low- income students and underrepresented students of color.
This column will focus on recent empirical studies of merit-based versus need-based financial aid. Then, legal challenges to merit-based aid will be analyzed. Finally, the implications for developmental education programs will be discussed.
Recent Studies on Financial Aid
Several recent studies have added empirical evidence to the merit versus need-based debate in financial aid. The state of Georgia started the trend towards merit-based aid when it introduced the Hope Scholarship in 1993. The rational behind most state merit-based programs is to encourage and reward academic work, staunch brain drain, and promote college access within a state. According to a Harvard Civil Rights Project report edited by Donald Heller and Patricia Marin (2002), there is a trend away from need-based aid and toward merit-based programs. According to the report, merit awards disproportionately go to students who are wealthier and in the racial majority. For example, 90% of the Hope Scholarships have been awarded to students who would have attended college without the aid. This is increasing the gap between white students getting access to college and African American, Native American, and Latino students being denied access to higher education (Heller & Marin, 2002; Heller & Rogers, 2004).
Several other reports released in 2004 advocate need-based aid versus so called merit-based aid. The Lumina Foundation for Education's 2004 study "Expanding College Access: The Impact of State Finance Strategies" recommends that states increase spending on need-based aid to improve college participation among students from low-income families. The study found that need-based aid plays a bigger role in influencing high school graduates to go to college than a number of other factors, including tuition.
The Maryland Higher Education Commission (2004) released a report that dispels the common myth that need-based aid is given to students who are unable to excel in higher education. The Commission's report compared Maryland students who received need-based financial aid versus those students who did not meet the low and middle-income guidelines for the scholarships. Maryland students who received need-based aid were slightly more likely to remain in college after the first year than students who did not receive such aid. Students who received need-based aid were also more likely to transfer from community colleges to four-year institutions. …