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More States, Colleges Adopting Merit Aid To Attract Students

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Last month, the Virginia legislature agreed to fund a program that will provide $3,000 merit scholarships to 50 students planning to attend a public or private four-year college in the state.

At least 45 of the awards, to be given for the first time this fall, will be granted to students nominated by their high-school principals on the basis of class rank or to students who are finalists or semi-finalists in the National Merit Scholarship Program or the National Achievement Scholarship Program for Outstanding Negro Students.

The other five merit-scholarship recipients will be awarded to outstanding students transferring from one of the state's two-year institutions to a four-year school.

Such awards, being established by a growing number of states as well as by individual colleges and universities as part of the renewed national focus on "excellence," are seen by many as significant devices for encouraging and rewarding the achievement of high-school students.

But some education leaders worry that the new focus on merit scholarships will simply abet a "bidding war" between colleges facing a declining pool of 18-year-olds and possibly undermine the longstanding national commitment to target scholarship aid on those students who have the greatest financial need.

Twenty-six states are providing merit-based awards during the current school year, according to a survey conducted by the National Association of State Scholarship and Grant Programs. The survey indicates that about 80 percent of the dollar volume of those grants is concentrated in five states. The state merit awards average less than $400 per year, and only 18 percent of them are based solely on merit, according to the survey.

College Award Programs

A growing number of colleges and universities have also been awarding merit scholarships on the basis of academic promise and achievement.

A recent survey by the College Board indicates that about 86 percent of the nation's four-year colleges now give at least some scholarships based on academic achievement, an increase from 54 percent of colleges from 1974.

About 75 percent of postsecondary institutions overall offered academic merit scholarships, the College Board's study found.

Last fall, about $385 million in academic merit scholarships was awarded to about 330,000 students nationwide.

The awards went to about 6 percent of the college students who received aid and accounted for 3 percent of the total grants and loans disbursed, the study found.

The average value of an award was $1,189 for all institutions, ranging from a low of of $720 at two-year public colleges to more than $2,000 at the few proprietary schools that offer such aid. Merit-based aid at four-year private colleges averaged $1,558, while four-year public institutions provided merit awards of about $835, according to the study.

Recognition and Recruitment

College admissions officers and state officials instituting merit-based aid programs generally cite two major benefits. They say the programs recognize and encourage outstanding achievement in high school and bolster the academic climate and reputation of the institution that sponsors them.

The purpose of the new Virginia merit-scholarship program, for example, is "to recognize excellence and to retain in Virginia some of the outstanding students who, without the program, might have decided to attend college out of state," according to Barry M. Dorsey, associate director of the Virginia Council of Higher Education. Mr. Dorsey said a study two years ago indicated that about 500 of that year's high-school graduates attended one of 18 "prestigious institutions" outside Virginia.

John O. Startzel, associate director of admissions at Washington State University, which is beginning an extensive merit-based aid program next fall, suggested that a similar rationale spurred planners at his institution. "We wanted to recognize students who have done excellent work in high school," he said, "as well as to attract more qualified students to apply to the university and enhance the quality of the university."

Washington State University will waive all tuition and fees for National Merit Scholars and finalists. It will also offer high-school valedictorians and salutatorians and community-college transfer students with good academic records $500 annually.

The program will cost about $80,000 in the first year, according to Mr. Startzel.

He said college officials are hoping for a "snowball effect"--that a core of outstanding students will help raise the performance level of other students--and for a "magnet effect"--that a core of gifted students will attract other outstanding students to the school.

Bidding War

But those school and college officials who oppose merit-based aid programs argue that this kind of "bidding war" for the best students forces colleges to spend scarce resources on scholarships for those who do not need them.

"There is a lot of concern that you really can't buy good students, who make their decisions on the academic quality of an institution and what school is academically best. When you try to tilt the balance with more money, all you do is spend money that could help those who need it more," said Hal F. Higginbotham Jr., executive director of the College Scholarship Service of the College Board.

Richard W. Haines, director of admissions at Lafayette College and a trustee of the College Board, told educators attending the American Association of Higher Education conference in Chicago last month that no-need or merit awards "ignore" the fact that colleges already lack enough financial aid to go around and that available money should go to "qualified students who could not otherwise afford to enroll, not to those who would go to college anyhow."

The no-need scholarships, he said, also "erode the principle, which is generally accepted by college guidance personnel, that whenever possible students should select colleges on the basis of educational considerations, not financial inducements."

"When offered by institutions, the scholarships lure strong students away from other, more attractive institutions; they also enlarge the applicant pool by preying upon the many who hope, often quite unrealistically, that they will be chosen as scholarship recipients," Mr. Haines said.

John Phillips, executive director of the National Association of Independent Colleges and Universities (naicu), said, "Clearly, there is a strategy developing in some quarters that says if you can supplement need-based aid with merit-based aid, your institution has a comparative advantage" in the recruitment process.

Proponents argue, he added, that the programs "sustain overall enrollments and cash flow" at a time when tuition charges are up, financial aid is uncertain, and the size of the pool of high-school graduates is declining.

Evidence Lacking

"Despite the long history of such awards, there is a lack of real evidence of impact on the quality of the student body" or on recruitment, said Mr. Higginbotham of the College Scholarship Service. The College Board survey of merit-scholarship programs indicated that only 39 percent of the colleges said they had any evidence that their yield was higher as the result of such awards, he pointed out.

A clearer picture may emerge, he said, from a forthcoming study by the College Board of graduating high-ability seniors, which will examine the effects of merit aid on recruitment.

Higher Enrollment Rate

As a recruiting technique, merit-based rewards result in a higher rate of enrollment when offered to students with real financial need, but they do not appear to bolster the enrollment rate of students without financial need, said Henry B. Freeman, area director of the fundraising campaign for the University of Michigan. Mr. Freeman recently completed a study of the impact of merit-based awards on enrollment.

After examining enrollment decisions at 44 small private liberal-arts colleges in Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wisconsin, Mr. Freeman concluded that financial incentives may be "counterbalanced" by a "negative message" about institutional quality. Wealthier students selected a college primarily on the basis of its academic reputation and not its ability to offer financial aid, Mr. Freeman found; thus, institutions offering merit-based aid may send a message to students who do not need aid that their programs are "of low academic quality," he suggested.

Public-Policy Questions

"Bothersome" public-policy questions are also raised by merit awards, according to Mr. Haines. Among them: "Can Congress and state legislatures rightly appropriate tax dollars, collected in large part from families that cannot afford college, to families who can afford college or to colleges and universities that knowingly award grants to families that can afford college? On a more local level, can institutions rightly give wealthy students tuition subsidies that are funded in whole or in part by tuition payments from less wealthy students?"

One recent proposal--made by Gary L. Jones, under secretary of education for the U.S. Education Department--would appear to sidestep some of those problems.

Mr. Jones, speaking at the Chicago conference, called for the establishment of a merit-scholarship program sponsored by the private sector. (See Education Week, March 28, 1984.)

The program he outlined would provide outstanding college students with "Learning for Leadership Grants" of $2,500 yearly for up to four years. "Winners would receive grants from the resources of a new 'Learning for Leadership Trust,"' Mr. Jones said, "funded through private-corporation and individual subscriptions. An endowment of $500 million would support four-year scholarships for 20,000 students."

"An initial investment of $125 million would generate enough interest and dividend income to support a first group of 5,000 students for four years," he added.

Students 'Squeezed Out'

Merit-based programs, suggested Mr. Phillips of naicu, can be helpful to students who have been "squeezed out" of federal aid programs by the Reagan Administration's actions to tighten eligibility standards. "Those who fall into that never-never land between lower-middle and middle income can use merit scholarships to go to the college that they want to go to," Mr. Phillips said.

"The programs are not intrinsically wrong," he added. "The obvious danger is that merit aid would begin to supplant governmental programs and detract from need-based aid." Such aid, Mr. Phillips said, has been the principal instrument by which the government equalizes opportunity for higher education.

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