A DISTURBING TREND : FINANCIAL AID GOING TO RICH STUDENTS INSTEAD OF POOR STUDENTS

 
photo: Keyur Khamar



It appears that financial aid, a financial device put in place to help poorer students, is increasingly being used by some higher learning institutions to lure richer students instead. 

A report focused on Boston University's use of financial aid funds and found that they are using the money to lure rich students, while forcing poorer students to take on heavy debt, with which they are liable to be saddled for decades to come. 

But the reports also details how almost 2/3 of all private higher learning institutions are forcing students whose parents are near the poverty brackets to pony up almost 15,000$ even if the total household income of the student's family only reaches 30,000$.  

Another institution under the microscope is George Washington University, which employs similar qualification practices.  

These findings are in net contrast to the institutions' own assertions that they are committed to providing affordable education to low income students.  And that is a vital finding, since without that commitment being fulfilled, the promise of equal access to low income students all but vanishes. 

The trend, as ominous as it is, has to do more with prestige than with finances.  This is pursuit of wealthy students to gain notoriety among even richer ones and attract a certain group of people. Which in the long run, does also have revenue implications, since low income students are not capable of increasing the universities' bottom line. 

But how do these institutions divert funding to wealthier students? They do so by awarding funds to 'merit', to students who are in the top tiers of the schools and who often are also the wealthiest, while at the same time charging low income full students fees that are completely unaffordable to them.  

What is more puzzling is that the amount of merit aid recipients has jumped a whopping 44% in the 2007-2008 year compared to a decade ago. Even more worrisome, some public institutions are also starting to follow suit.  

Most Ivy League colleges however, only assign financial aid on the basis of the student's financial need.  

If the low income student has very good grades or academic standing, merit aid will find its way to him/her.  But that still excludes anyone who is not in the top tier of the college's standing.

This trend contributes to income inequality, since most low income students are at a net disadvantage as they arrive at the doorstep of higher learning institutions both in terms of their financial needs and scholastic achievements.  Families who can afford private schools and better educational settings are often placing their children in a better position to achieve both higher grades and qualify for entry to better colleges. 

It also seems to preclude, at least at first glance, the possibility for a lower income student who does not have a perfect gpa score to gain access to financial aid. 

Partial source : Bloomberg 5.8.13

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