By Marcella Bombardieri, Globe Staff, Globe Correspondent, 4/25/2004

Daniel Biehl had been accepted by three colleges, including Northeastern University, when a letter arrived from Northeastern sweetening the offer: The school would take $10,000 a year off its $35,668 sticker price.

He hardly needed the help. His father, a software consultant, earns $150,000 a year. But Biehl — who got mostly A’s at his Florida prep school and scored 1210 on his SATs — is the kind of student Northeastern wants to attract.

“I didn’t have too much of a need for it,” said Biehl, 19, of the scholarship. “I think of it as a gift, an extra thing I can be proud of.” He was one of the growing number of Northeastern students to receive ?nancial aid regardless of their need, part of the university’s drive to build its reputation by attracting better students.

As college becomes less affordable for many Americans, public and private institutions nation-wide are spending more of their money on people like Biehl -- high-achieving students, generally from middle- and upper-middle-class families, who help bolster the schools' reputations and rankings. Though the practice of offering aid to the most impressive students has brought payoffs in the college rankings for some schools, including Northeastern, many researchers say it is hurting students from poorer families.

"More and more schools have been shifting financial resources from poor kids to well-off kids," said Gordon Winston, a Williams College economist who studies the financing of higher education. "They are moving away from a real sense of mission and egalitarianism to scrambling for high-quality students so they'll do better in US News."

This type of financial assistance, called merit-based aid, has a long history, but its boom in the past decade has been enormous. The amount of merit aid handed out by all colleges, public and private, more than doubled through the 1990s, rising from $1.2 billion in the 1992-93 school year to more than $3 billion in 1999-2000, according to one study. By contrast, financial aid based strictly on need grew by just 60 percent, while tuition and fees rose about 50 percent.

During that time, the amount of aid given to the richest 25 percent of students at both public and private schools exceeded the amount given to the poorest quarter. In 1999, the most recent year for which figures are available, a student from a family making at least $83,000 received, on average, $662 more in aid than a student from a family making less than $31,000, according to the College Board.

College officials often convey the opposite impression. With great fanfare, Harvard University recently announced it would expect no contribution from parents whose family incomes are below $40,000. But Harvard, along with the richest two dozen or so institutions in the country, has enough money to meet the full financial need of all its students, most of whom turn out to be from families that are middle-class or above. (Schools usually define "need" as the portion of college costs a family can't afford to pay, based on income, savings, and any public grants for which they qualify.)

Beyond that rarefied group of schools, almost every college in America grapples with a limited financial aid budget. With federal Pell grants now covering only a fraction of most college's costs, schools have to make hard decisions about which students get grant money to cover the shortfall and which students are on their own.

"Every dollar to an upper-income student is at the expense of a needy student," said Pennsylvania State University professor Donald E. Heller, who analyzes data on financial aid.

Doris Obando is one of the latter. Obando, who immigrated legally from Colombia after high school, worked a factory job to pay for English and community college classes, and eventually applied to Northeastern to get a degree in health sciences. Her mother, a gift shop cashier at the Hyatt downtown, earns less than $23,000 a year. Obando's total grant from Northeastern this year: $5,000.

Obando, who lives with her sister in Revere, has a work-study job at the library and a second job as a waitress at a private club on Beacon Hill. She almost never eats out or goes dancing or to the movies because she doesn't want to ask her mother for pocket money.

This year alone, she borrowed $21,000 in federal and private loans. She has two years left to get her degree and doesn't even know the total amount that she owes. After college, she plans to earn a master's degree.

"Even if I have to pay this money for my entire life, I'm going to do it," she said. "I think education is important. You have to sacrifice, I guess."

Much the same pattern holds at public institutions, where merit aid nationwide has grown from 9 percent to 25 percent of state grants in a decade, Heller said. At the University of Massachusetts, 58 percent of aid from the state and UMass itself is merit aid. A proposal by Governor Mitt Romney to hand out $50 million in scholarships to students who earn top scores on the MCAS would have increased that further, but was quashed in the latest House budget.

Policies favoring merit aid have clear appeal to middle- and upper-income voters frustrated with rising tuition. And they're also a popular way for states to keep more of their brightest young people in-state, said several researchers.

But perhaps the biggest factor driving the aid trend is the ever-rising competition among schools spurred by the college rankings, especially US News & World Report, educators say. The rankings rate schools on the average high school class rank and SAT scores of entering students, making it crucial for schools to lure high achievers. At the same time, students have become much more likely to look nationally for potential colleges, meaning each school faces a lot more competitors.

As colleges have become increasingly business-savvy, they view financial aid as much from a strategic "enrollment management" perspective as a charitable one, said Michael S. McPherson, former president of Macalester College, who researches college pricing.

"They think of it the way airlines price seats or Wal-Mart prices products," he said. "It becomes more like `Let's Make a Deal' than the cloistered halls of academe."

At universities that grant merit scholarships, leaders defend the practice as necessary, and harmless to students from poorer families. Northeastern officials say that 90 percent of the money awarded in merit grants would have been given to the same students on the basis of need. Obando's $5,000 grant, for instance, is classified as merit.

Calling it merit aid demonstrates how much the school wants the student, said Philomena Mantella, senior vice president for enrollment management. "We are letting the achievement message lead because it says, `Keep up the good work,' " she said.

Northeastern has doubled its aid budget in the last five years, and now guarantees to students that their aid packages won't be reduced over the five years of their education. Still, as at most schools, there's a gulf between what students need, based on federal calculations, and what Northeastern offers them on average, especially given the decline in the real value of state and federal assistance in recent years.

That gap averages about $7,000 per student at Northeastern, based on federal standards, although the university, based on its own estimates of families' ability to pay, considers it to be more like $4,000.

"That gap is much too big, and reducing it continues to be a top goal," said Northeastern president Richard M. Freeland. As for merit aid, Freeland said "There is no other way for Northeastern to accomplish what we need to accomplish. It's part of the competitive reality we're dealing with."

Even staunch critics of merit scholarships don't blame individual schools for using them.

"If I were president of those institutions I might be doing the exact same thing," said Williams College president Morton Owen Schapiro, an economist. "The individual private interest of many of these campuses is increasingly at odds with what promotes the public good."

George Washington University in Washington, D.C., gives a quarter of its aid to students who don't qualify for need-based support -- and has seen results. The number of entering freshmen in the top 10 percent of their high school classes rose 20 percentage points between 2000 and 2003.

"We want kids who are good at dancing, who are good at collecting butterflies, who are good at basketball," said president Stephen J. Trachtenberg. "At the point where we have the capacity to attract students with the magnetism Harvard does, we'll be happy to follow Harvard's policies."

At Northeastern, that $10,000 lure didn't actually help land Biehl, the Florida native. He had already pegged the school as his first choice. But it did persuade Holly Fletcher, another freshman, who came to Northeastern for only one reason: It was free.

Fletcher was valedictorian of her Tennessee high school and had a long list of extracurriculars. Her heart was set on American University in Washington, D.C., but she couldn't imagine turning down Northeastern's offer of full tuition and room and board.

Like Biehl, Fletcher doesn't exactly fit the profile of a scholarship student. Her parents earn more than $100,000 between them, and her grandparents had saved a nest egg for her education. (Her parents are divorced, however, and she might have qualified for need-based aid because of her mother's $34,000 salary.)

As it turns out, Fletcher hated Northeastern at first and nearly transferred to American, where she would have gotten a much smaller scholarship. But now she's made her peace with the school. And the money has been a boon to her college career: Because of her scholarship, she doesn't have to work a campus job, so she spends up to 20 hours a week as a designer at the school newspaper's office.

As much as she appreciates it, however, she realizes the scholarship isn't quite philanthropy.

"I understand why schools do this," she said, "as long as you understand the school is a business."

Globe correspondent Stephanie Vosk contributed to this report. Marcella Bombardieri can be reached at bombardieri@globe.com.

This story ran on page A1 of the Boston Globe on 4/25/2004. © Copyright 2003 Globe Newspaper Company.

Back to the E-Zine Archives | Main Menu