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Should Public Colleges Play the Merit-Aid Game?

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In this week's issue: Should public universities be playing the merit-aid game at all? How is America
 
February 14 · Issue #26 · View online
The Weekly Dispatch
In this week’s issue:
  • Should public universities be playing the merit-aid game at all?
  • How is America doing on its college-completion goals?
  • We’re helping college journalists cover their campus better (and sending them to Orlando to do it).

Is a Merit-Aid Arms Race Hurting Poor Students?
Photo by Brian Evans
Photo by Brian Evans
AT&T is running a great deal for Valentine’s Day. Buy one Apple Watch before Sunday and you can get a second one free. Maybe if the cellphone carrier thought more like a university, they’d call it their Presidential Time-Telling Scholarship.  
We don’t talk about it this way too often, but most “merit aid” is really better described as a coupon. (Buy one semester, get the second half off.) Colleges use that type of discounting as an incentive to get families to enroll. It’s been a long-standing feature of private colleges’ “high-cost, high-aid” pricing model.
New America released a report this week analyzing how that same strategy has taken over public colleges. The report’s subhead doesn’t mince words: “How Enrollment Management and the Merit-Aid Arms Race Are Derailing Public Higher Education.”
Stephen Burd, a senior writer at New America, has been tackling this topic for years, first with a series of reports called “Undermining Pell.” This latest one looks at how merit aid shifted at 339 public universities between 2001 and 2017: 
  • More than half of the schools doubled the amount they spent on non-need-based aid, after adjusting for inflation.
  • Public flagships get a lot of attention but regional state colleges are also devoting an even larger share of their institutional aid to non-needy students. 
  • And remember, it’s not like this is extra money colleges are spending on non-needy students after they’ve taken care of the bills for all the others. Overall, the colleges in the New America report are now covering 66 percent of students’ financial need, on average. Back in 2001, nearly a quarter of the colleges in the study met 85 percent of financial need. Now, just 8 percent cover that much.
But not everyone is doing it. Just as notable are the few states, including some with outstanding higher-ed systems, that don’t play this merit-aid game. 
  • The 11 North Carolina public universities in the report, for instance, spend just 1 percent of their institutional aid dollars on non-needy students. California’s universities, likewise, spend 6 percent of their institutional aid that way.
  • In fact, Temple University — one of the places where merit aid has exploded — now spends $80 million of its own money on non-needy students, more than all of the University of California campuses combined.
Steve (a one-time colleague of ours at The Chronicle) comes hard at the entire field of enrollment management. Its chief goal, he says, is to figure out the exact price point — and not a dollar more — that will entice different groups of students to enroll.
“Therefore, using financial aid to meet students’ full need is considered wasteful and inefficient.”
The enrollment managers, of course, are looking out for the financial health of their institutions. Steve acknowledges their argument that this type of financial-aid leveraging helps colleges’ bottom lines and that, in turn, lets them spend more money on need-based financial aid. He just hasn’t seen any evidence that’s really the case.
Instead, he argues, the incentives have to be changed, and that will require federal intervention. Ultimately, in a system of coupons and discounts who will look out for poor students?
(P.S. The burger-stand photo is from Silay City in the Philippines. Started in 1997, Angel’s Burgers now has 1,300 branches and kiosks around the country. The key to its growth, says the couple who founded it, has always been the buy-one, take-one deal.)
Where We're Headed on College Completion
For more than a decade, the goal of growing the share of Americans with a college degree or a high-quality credential has been at the center of a lot of policy discussions. The Lumina Foundation has been pressing toward a target of 60 percent by 2025. Early in his presidency, Barack Obama called for America to have the highest proportion of college graduates in the world by 2020. (Spoiler: We didn’t get there.)
Along the way, 45 states set college-completion goals of their own. A new report, published this week by Ithaka S&R, takes stock of whether we’re on track to meeting any of those targets.
The bottom line: If current trends continue, 54 percent of Americans between the ages of 25 and 64 will have a college degree or credential by 2025. That’s progress, up from 48 percent in 2018, but short of the goal. (Ithaka S&R projects the nation would get to that 60 percent target by 2032.)
Among states, only three—Arizona, Florida, and Massachusetts—are projected to achieve their own, specific college-completion goals.
One of the report’s most-striking points is this: More than a dozen states would be able to meet their goals if they did this one thing — close their gaps in college attainment by race. In states like New Mexico and Texas, bringing all residents’ completion rates up to that of white residents’ would increase the state-wide completion rate by about 15 percentage points.
In America, close to one in two white adults ages 25 to 64 has an associate’s degree or higher. That compares with not quite one in three black adults and just one in four Latino adults. Still, the report says, only seven states with college-completion strategies have set explicit goals around narrowing those gaps. 
Training for College Journalists
We’re collaborating with the Education Writers Association to help college journalists cover their campuses better. In many places, these students are the only local reporters covering higher ed.
We’ll be holding workshops at the EWA National Seminar in Orlando in May and will pay travel costs for the students selected to participate. The short application is here, and the deadline is March 16. Please help us spread the word.
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Calendar
We’ll be criss-crossing the country over the next month or so. Reach out if you’d like to chat with us about Open Campus.
  • SXSWedu in Austin from March 9-11.
  • American Council on Education annual meeting in San Diego from March 15-16.
  • ASU GSV Summit back in San Diego from March 30-April 1.
We Want to Hear from You
  • News Orleans: Our partnership with The Lens to hold a series of community forums in New Orleans means we’re interested in hearing from any Open Campus readers with perspectives on higher ed in the city.
  • Financial-Aid Offers: Andrea, our reporting intern, is collecting examples of financial aid offers for an upcoming story. Reach her at andrea@opencampusmedia.org.
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