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2011 August 18

Need-based vs. merit aid

Filed under: Uncategorized — gasstationwithoutpumps @ 10:24
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Financial aid for college has become almost entirely “need-based”, except for athletic scholarships. In the process of writing my previous post about Stanford’s on-line AI course, I looked up what Stanford tuition is, and was directed to a page of statistics about Stanford: Stanford University Common Data Set 2010-2011.  In addition to the estimated cost of being a Stanford undergrad (about $55,611), they have statistics on how much is spent on financial aid:

Need based Non need based
$ $
Federal 7,396,882 237,927
State (i.e., all states) 3,528,578 18,348
Institutional (endowment, alumni, or other institutional awards) and external funds awarded by the college excluding athletic aid and tuition waivers 117,012,781 4,845,292
Scholarships/grants from external sources (e.g., Kiwanis, National Merit) not awarded by the college 4,301,567 5,699,901
Total Scholarships/Grants 132,239,808 10,801,468
Self Help
Student loans from all sources (excluding parent loans)  1,802,162 5,450,674
Federal work study 2,563,595
State and other work study employment 2,039,516 1,011,460
Total Self Help 6,405,273 6,462,134
Parent Loans 6,558,758
Tuition Waivers
Athletic Awards 2,643,976 14,095,400

Note that non-need-based awards other than athletic awards are primarily external and total $10.8 million, while non-need-based athletic awards come to $14.1 million.   Clearly Stanford aggressively recruits athletes, but not scholars.

Note that they do give a lot of need-based awards, $117 million, which dwarfs all other financial aid.  Still, a 2% increase in that funding would wipe out “need-based” loans, and a 6% increase could wipe out all Stanford student loans (well, another 6% to wipe out parent loans as well).  Redirecting the non-need-based athletic scholarships could guarantee that no Stanford undergrad took out student loans!  I doubt that would ever happen though, as Stanford has long prized athletics over any other art form, at least based on how much they subsidize it.

Of course, Stanford is hardly typical of financial aid.  Do other schools provide more merit-based aid?

The UCSC Common Data Set pages are less well formatted, but just as interesting. The total scholarships and grants are $100,995,238 (need-based) and $3,280,555 (non-need-based), so merit-based aid is an even smaller percentage of aid than at Stanford (though more of the merit-based aid is institutional rather than external).

Notably at UCSC loans and work study are bigger than at Stanford, making total self-help much bigger: $45,1121,901 (need-based) and $13,626,044 (non-need-based).  Parent loans are also big at UCSC: $1,960,207 need-based and $21,236,029 non-need-based. There are no athletic awards at UCSC.

Students acquire far more debt going to UCSC than going to Stanford.  The UC system is no longer a low-cost way to get a first-rate education, and it looks likely to continue to get more expensive while quality declines for as long as we have a government more interested in running the world’s largest prison system than they are in the world’s largest research university.

Merit scholarships have practically disappeared.  Only need-based aid and athletic scholarships still exists, which means that bright kids from the middle class are getting squeezed out of college education.



  1. It actually never occurred to me that merit-based scholarships weren’t more common. I was accustomed to “Academic Scholarships” which provide different tiers of support based on an incoming student’s GPA and SAT/ACT scores. These scholarships were granted automatically to incoming students (an application for support was not required) and support was automatically extended through 4 years of study as long as the student stayed above a GPA threshold defined by their tier of support.

    I attended a small (~2000 undergrads), private, liberal arts college. Perhaps this kind of support is only common to these types of institutions? The following Google search shows schools with similar types of support: “Academic scholarship”

    Comment by Nathan — 2011 August 18 @ 12:49 | Reply

  2. Very few of the top schools offer substantial merit aid. Going down the ranking list will reveal increasingly more schools that offer more generous merit packages.

    Comment by Grace — 2011 August 18 @ 13:37 | Reply

  3. […] Need-based vs. merit aid ( Share this:Like this:LikeBe the first to like this post. This entry was posted on Thursday, August 18th, 2011 at 6:03 pm and tagged with College Board, College tuition, Cost, Glenn Reynolds, Herb Stein, Higher education, Texas Higher Education Coordinating Board, University of Tennessee College of Law and posted in Accountability, Affordability, Education, Education Reform, Higher Ed Controversy, Jobs. You can follow any responses to this entry through the RSS 2.0 feed. « Two-year Degree Courses Would Ease Student Debt […]

    Pingback by A Bubble in Higher Education « — 2011 August 18 @ 16:04 | Reply

  4. Like Grace says in comment 2, many “top tier” colleges offer little or no merit scholarships. Perhaps they consider all accepted students of such exceptional academic quality that they cannot, or do not want to, distinguish levels of academic merit amongst them.

    This was true of my college, which was a small private liberal arts college of 2000 (like but unlike that described by Nathan in comment 1). They offered no merit scholarships. Though I believe that, unlike Stanford, they also offered no athletic scholarships.

    What was worse was they subtracted any outside merit-based scholarships I had received from their financial aid offer. So my family would end up paying the same with or without the outside scholarships.

    However, they were fairly generous in their need-based scholarships, and committed to meeting 100% of financial need, with an aid package primarily made up of grants that did not need to be repaid, unlike some colleges which do not make that promise. In this way, while there might be some quibble about their formulas for determining financial need, they did make it affordable based on what a family could pay, for bright kids from lower, middle, and upper classes.

    I cannot speak to whether a similar policy is in place at Stanford, but such a commitment to meet full financial need could mitigate the low amount of merit-based scholarships. I am more shocked at so few merit scholarships at a public university like UCSC; you are right to criticize this.

    Comment by nyates314 — 2011 August 18 @ 21:49 | Reply

    • Merit-based scholarships are almost entirely funded from donations, which UCSC is way behind other colleges (even other public colleges) in getting. Need-based scholarships are mainly created by diverting tuition (and formerly state funding) from the richer students to the less wealthy ones. UCSC admissions and financial aid has a strong egalitarian ethos, where achievement is valued less than “overcoming adversity”, so there has been little push on campus to do anything for the brighter students. As a result, we are in the unusual position of having high attrition at both the high end and the low end of our student body. (Too many of the top students transfer to other colleges, where honors students are given more attention or more aid.)

      Comment by gasstationwithoutpumps — 2011 August 18 @ 22:40 | Reply

  5. How are “bright kids from the middle class are getting squeezed out of college education” with regard to Stanford. What is your definition of middle class here?

    “For parents with total annual income below $60,000 and typical assets for this income range, Stanford will not expect a parent contribution toward educational costs.”
    “For parents with total annual income below $100,000 and typical assets for this income range, the expected parent contribution will be low enough to ensure that all tuition charges are covered with need-based scholarship, federal and state grants, and/or outside scholarship funds.”

    The median household income in California is around $60,000 and the median household income for the U.S. is closer to $50k. That means that over half of the households (and more than half of the kids) can go to Stanford for no parent contribution. $100k is in the top fifth of households. If you’re saying that “rather well-off but not super rich families are getting squeezed out of college education,” then you might have a point, but I’d like to see some evidence that those students from the top 15% are underrepresented in higher education.

    While there may be many problems with athletic scholarships, it’s not accurate to claim that academics directly subsidizes athletics at Stanford. Stanford has over 500 endowed athletic scholarships.

    Comment by Jeff Forbes — 2011 August 19 @ 08:58 | Reply

    • Sorry—misunderstanding. I don’t think Stanford’s policy is squeezing the middle class. I think that UC’s policy is. Stanford is providing almost all the financial aid that is needed (though I think they would do well to increase it by 6% to eliminate need-based loans and I think that they should spend as much on non-athletic merit-based aid as they do on athletic non-need aid). But Stanford has a tiny number of students (total undergrad 6,800, and a much smaller number from California), so they are not making a huge impact on middle-class students from California.

      UCSC is not meeting all the financial need though, and middle-class students are graduating from UC with huge debt loads.

      Incidentally, I don’t think I claimed that academics were subsidizing athletics (though that claim certainly could be made), just that Stanford put a much higher priority on athletics than on academics for recruiting students.

      Comment by gasstationwithoutpumps — 2011 August 19 @ 11:03 | Reply

      • Sorry for the misunderstanding.

        I’m a Stanford alum, but I teach at Duke. Duke has some merit scholarships, and there’s little evidence that merit scholarship recipients draw from a wider socioeconomic base than the rest of the student body. In order to be a merit scholar at Stanford (i.e., be in the very top tier of applicants), one would likely have to published substantial research in high school or achieved some other exceptional extracurricular distinction. That’s far easier to do if your parents are professors, for example.

        Stanford aggressively recruits students for academics. Do they recruit them in the same way as they do for sports? No, but they definitely recruit widely. Redirecting the money endowed for athletic scholarships to merit scholarships is unlikely to affect students from middle class families in any substantial way. The main effect of merit scholarships seems to be to attract students who might have gone to other schools that are higher ranked. If UCSC had more merit scholarships, they might attract more students who were admitted to Stanford, for example, but they wouldn’t necessarily attract more “middle class” students.

        Comment by Jeff Forbes — 2011 August 19 @ 11:35 | Reply

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