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Who Should We Help? The Negative Social Consequences of Merit Scholarships

Authors: Donald E. Heller, Patricia Marin
Date Published: August 02, 2002

From a civil rights standpoint, shifting from need-based to "merit" aid means shifting funds from blacks, Latinos, and Native Americans to whites and Asians, from city and rural residents to suburban residents, from children from one-parent families to those who have two parents.

Editor's Note: This is a collection of papers from a 2001 symposium at Harvard University entitled "State Merit Aid Programs: College Access and Equity." After a Foreword by Gary Orfield, the seven papers are (1) "State Merit Scholarship Programs: An Introduction" (Donald E. Heller); (2) "Merit Scholarships and College Access: Evidence from Florida and Michigan" (Donald E. Heller and Christopher J. Rasmussen); (3) "Incentive Effects of New Mexico's Merit-Based Scholarship Program: Who Responds and How?" (Melissa Binder, Philip T. Ganderton, and Kristin Hutchens); (4) "Race and the Effects of Georgia's HOPE Scholarship" (Christopher Cornwell and David B. Mustard); (5) "Race, Income, and the Impact of Merit Aid" (Susan Dynarski); (6) "Do State Financial Aid Programs Cause Colleges To Raise Prices? The Case of the Georgia HOPE Scholarship" (Bridget Terry Long); and (7) "Merit Scholarships and the Outlook for Equal Opportunities in Higher Education" (Patricia Marin). Papers valuable via ERIC:


We are in the midst of a destructive set of federal, state, and local changes in higher education policy that limit the ability of minority and low-income families to go to college, damage their future and the future of their communities, and sacrifice too much of the human potential of a society where soon half of all school age children will be non-white. In our society, individuals and families who have not benefited from attending post-secondary education are far less successful financially, earning less in real terms than they did a generation ago. More than ever before, social and occupational mobility is related to higher education. Therefore, our goal must be to develop policies and programs that increase access to those students who have been overlooked in the past.

During the 1960s and 1970s there were various attempts to do just that. We kept tuition prices down, greatly raised financial aid for poor families, created the work study program, and developed affirmative action plans to increase minority enrollment. Gaps narrowed and minority college going increased.

Since that era, however, we have witnessed a significant reversal of access to higher education for minority and low-income students. Now we have high and rapidly rising tuitions, affirmative action has been banned in some of our largest states, institutions have increased their entrance requirements, and gaps in college participation are growing by both race and income. National studies have disclosed huge gaps of unmet financial need for low-income students.

Imagine someone reacting to higher education's current situation by saying that what we needed were large new programs to subsidize white and middle- to upper-income students to attend college, and that it was not necessary to raise need-based aid even enough to cover new tuition increases. We would give some minority students entering awards because of their relatively high grade point averages from inferior segregated schools. However, we will take their aid away when they cannot get a "B" average in a vastly more competitive college setting and blame them for not being up to the task. A huge amount of money would go into this new program, far more than was spent for the need-based scholarships in some states. We would get the money from an extremely regressive tax-a state lottery that drew money disproportionately from poor and minority players. In other words, poor blacks and Latinos would end up paying a substantial part of the cost of educating more affluent white students, who would have gone to college even if they had not had the additional financial incentive. And to add insult to injury, colleges would cut their own financial aid funds, or shift these resources to give more money to high scoring students. In cases where the financial aid made more students eager to go to a particular institution in the state, rather than an out-of-state school where they would have to pay tuition, the in-state institution could raise its selectivity ratings by excluding students with lower scores, students who would usually be minority and from less affluent families.

A policy such as this would make no educational sense. Yet this type of policy is now in place in more than a dozen states. Of course, no one intended to skew financial aid in these ways, but the broad-based merit aid scholarship programs states have adopted have produced these results. Although these programs stem from very popular, good ideas-rewarding the "best" students and keeping them in their state-their ultimate effects are of huge concern to those interested in the civil rights of underrepresented students. Genuine access to higher education for poor and minority students is as basic to civil rights today as access to high school was a half century ago.

There are a series of basic reasons why these programs are not only unable to address serious education issues but are also making the inequities in college participation worse. First, the primary purpose of financial aid is to make certain that we do not decide access to college on the basis of family income and wealth. In a society where all the growth of income goes to those with education beyond high school and equal access to education is the only tool we have for making things fair, we have to make college possible for all who can benefit. Otherwise, we may lock in inequality from generation to generation and perpetuate the kinds of deeply rooted class structures that have troubled older societies. In our society, of course, these structures would tend to perpetuate racial inequality as well.

A second reason for need-based rather than strictly merit-based financial aid is that the students with the highest scores and grades are usually from better-off families and are most likely to go to college without any aid. Furthermore, the "neutral" measures of merit are actually very strongly related to unequal family background. For example, the high SAT scores received by a student with college-educated parents, with lots of books and educational materials at home, who has gone to very good schools, who has had the best teachers, peer groups of similarly educated students, and enriching summer experiences, is not simply a measure of aptitude or native ability but is, to a considerable extent, a measure of and the result of privilege. In fact, of all measures, race and social class show the strongest correlation with SAT scores and high school grade point average, with students from poorer and minority families scoring lower on both measures. This test (which is used in some states to award merit scholarships) does measure significant differences, of course, but it has been repeatedly shown to be at best mildly predictive of first-year grades in college and has been shown to have little validity in predicting longer-term academic success.

Yet another reason why the role of family resources and financial aid in promoting college access needs to be looked at very closely is that tuition costs have risen more rapidly than family income virtually every year for more than two decades and, during this period, the incomes of families have become far more unequal. This means that more and more families simply cannot afford to send their children to college without aid. The recent report of the federal Advisory Committee on Student Financial Assistance, Empty Promises: The Myth of College Access in America, concludes that there is a gap of several thousand dollars between the aid that is available to needy students and the cost of college. Millions of families, including most of the nation's minority families, have virtually no savings or net worth (such as equity in a home) to draw against to pay for college. Too many students are forced into impossible situations, such as working full-time, raising families, and trying to go to college part-time, which greatly lessens their chances to do well or ever graduate. Since many students have financial motivations when choosing a college or deciding to drop out, affordability issues become very critical.

College affordability becomes particularly serious when tuition soars. Since the l970s, whenever there is a recession the states have cut college funding and the public institutions have responded with sharp increases in tuition to avoid sudden cutbacks in services and programs. Because state budgets have to be balanced every year and there has been very strong political pressure against even temporary tax increases, there has just been an implicit decision to tax the students by shifting to them and their families more of the burden for paying for college. For the same reasons, there has often been a failure to raise state need-based aid significantly to even partially make up for the increase in tuition. The round of double-digit tuition increases announced in many public colleges and universities for the fall of 2002 shows this pattern in many regions.

From a civil rights standpoint, shifting from need-based to "merit" aid means shifting funds from blacks, Latinos, and Native Americans to whites and Asians, from city and rural residents to suburban residents, from children from one-parent families to those who have two parents. These are clearly regressive changes in social terms. We are in a time in which all families worry about college costs and face costs that are higher relative to income than the parents experienced as students. Most Americans are not saving nearly enough to pay for their children's college costs. Students worry about the debts they will face when they graduate. Even though the real costs are still quite manageable for middle-class families and the benefits of college education vastly outweigh the costs, everyone is feeling squeezed. Every parent who has a child who has worked hard in school and gets pretty good grades believes, of course, that his or her child has "merit." In this situation it is incredibly popular for a politician to promise to help the worried middle-class families, the very families who vote at the highest level, by recognizing and rewarding the merit of their children. It is hard to imagine a more irresistibly popular policy, particularly if there does not have to be a new tax to pay for it. But as documented in this report, these programs often assist not just middle-class families, but very wealthy families as well. In this situation, those who get hurt are disorganized and politically ineffective and do not understand the complexities of the system, so the political costs are minimized.

In the current state of affairs, with large social costs and deepening racial inequalities, it is extremely important that political leaders, college officials and college faculties, student organizations, and the press keep their eyes firmly on the basic question-are we spending a rapidly growing share of our inadequate student aid budgets to pay for programs that actually make college opportunity even more unequal? We see that students from families in the bottom fourth of the income distribution have less than one-eighth the chance to get a B.A. than do those in the top quarter. In addition, the more affluent students are thirty times more likely to get an M.A. than are their poorer counterparts. Racial gaps in both college participation and completion are huge. These differences threaten the future of a society that is becoming more multiracial, more unequal in income, and more dependent on education. In this situation taking scarce funds to aid students who would go to college anyway is indefensible and destructive. State leaders need to directly confront these issues, as do federal legislators considering Pell Grants, loans, and tax subsidies for affluent students and families that shape opportunities for millions of students.

We hope that this report will bring the reality of merit aid programs to the attention of state policymakers and others involved in financial aid decisions. It is clear that many of the goals of these programs, especially those that involve increasing access to college, are not being met. Instead these programs are increasing already existing inequities in higher education. As brought to light by these studies, merit aid programs are, at best, not meeting their promises. At their worst, they are locking an increasing number of students out of college

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