Study Finds That Merit Aid at Private Colleges Has a Dampening Effect on Both Racial and Socioeconomic Diversity

A new study published by the Cornell Higher Education Research Institute finds that highly selective private colleges and universities that chose to offer merit-based financial aid have over the past decade enrolled fewer low-income students. These colleges have also enrolled fewer black students, according to the report.

Many of these private colleges have used merit-based aid to lure highly qualified, upper-middle-class students away from Ivy League and other top-tier institutions that offer no merit-based scholarships.

Amanda L. Griffith, the author of the study, is an assistant professor of economics at Wake Forest University. Using data from The College Board on 133 private colleges and universities that offer financial aid, she found that from three to five years after these colleges began to offer merit-based scholarships, the number of Pell Grant students began to decline. After a decade, the percentage of total enrollments that were Pell Grant recipients was an average of five percentage points lower than was the case before merit scholarships were introduced. The percentage of blacks in the student bodies of these institutions dropped by an average of two percentage points in the decade following the establishment of merit-based financial aid.