Essential Pittsburgh
3:45 pm
Fri September 20, 2013

Financial Aid Takes a Surprising Shift

What does "merit aid" really mean today?
Credit Sal Falko / Flickr

Over the past several years, there’s been a shift in the financial aid industry. According to ProPublica reporter Marian Wang, a growing share of financial aid has been given to the highest income quartile, with less offered to those in the lowest income quartile.

Wang says financial aid has “shifted to being more about the schools needs and their enrollment goals than necessarily meeting the needs of the students.”

She says schools are being advised by outsiders on how to capitalize economically while using “merit aid.” Merit aid is a very free term and can be defined and redefined by the school when the college uses it for a student.

What Wang has observed is that the merit aid packages typically go towards an area of interest for the school. This includes athletics, award-winning students, international students, and other areas that increase the prestige of the school.

Colleges are constantly striving to better their rankings in order to entice prospective students to pick their school over others. A key group schools tend to focus on are out-of-state students, who typically pay a higher tuition rate. She says these tend to be families that have “the ability to pay” but need an extra incentive to increase their “willingness to pay.”

Wang says, for lower income students the best alternative can be community college. The costs are lower and the credits can be transferred to a higher ranking university later in their collegiate career.