Is College Financial Aid Shifting From Need To Merit?

See Freebies for the Rich by CATHERINE RAMPELL of the NY Times. Excerpts:

"Over the years, many state-university systems — and even states themselves — have shifted more of their financial aid away from students who need it toward those whose résumés merit it. The share of state aid that’s not based on need has nearly tripled in the last two decades, to 29 percent per full-time student in 2010-11. The stated rationale, of course, is that merit scholarships motivate high-school achievement and keep talented students in state."

 "about 1 in 5 students from households with income over $250,000 receives merit aid from his or her school. For families making less than $30,000, it’s 1 in 10."

"After years of state-funding cuts, many recognize that wealthy students can bring in more money even after getting a discount. Raising the tuition and then offering a 25 percent scholarship to four wealthier kids who might otherwise have gone to private school generates more revenue than giving a free ride to one who truly needs it."

"enticing these students also helps boost a school’s rankings."

"“nearly all” of the spending on state merit-based scholarships had little effect on keeping students in state after they graduated."

"A recent study by researchers at Harvard Kennedy School looked at a scholarship program in Massachusetts in which high-scoring students get tuition waivers at in-state public colleges. It found that taking the scholarship actually reduced a student’s likelihood of graduating because they ended up at a school with a completion rate lower than one of the other schools they could have gone to."

"Among needier kids, the six-year graduation rate is 45 percent when grants cover under a quarter of college costs versus 68 percent when they cover more than three-quarters"

"If you look at comparable stats for high-income students, the amount of aid makes almost no difference. Their graduation rates are around 78 percent either way."

"The share of 24-year-olds from families in the top-income quartile who hold college degrees rose from about 40 percent in 1970 to 70 percent in 2011. The share from the bottom quartile, however, remained pretty flat, edging up to 10 percent from 6 percent"

"having a higher density of college-educated workers boosts wages of even those around them without college degrees. Economists refer to the ripple effect as the “positive externalities” of higher education."