Collegiate players don’t get to bask at their own Oscar award ceremony, but their reward is just as coveted. Their academic calendars are marked for one big day every year when U.S. News & World Report releases its newest rankings of the nation’s colleges and universities.
For colleges, a high ranking is better than a gold-plated statue. In fact, even a slight up-tick in a school’s ranking can trigger a delirious celebration, while a demotion can create anguish and despair within a school’s academic inner sanctum.
Because the stakes are so high, some schools spend millions on
self-improvement projects aimed at impressing the magazine’s editors.
(No lie!) Some administrators are even personally rewarded if the
verdict is a good one.
This is what explains the ratings obsession: Teenagers and their
parents now consider U.S. News & World Report’s annual college publication
the higher ed Bible. Families use it as a shortcut to judge the
quality of individual schools, and they often express greater interest in
schools with stellar ratings. This phenomenon leads to more kids
applying to ratings winners or institutions that have noticeably
improved in this numbers game. This then allows the lucky institutions
to reject more applicants. And turning away more kids can then
help these schools boost their ratings even higher. This silly cycle
never ends.
When a college or university is intent on leapfrogging over its
competitors, an excellent way to pull this off is to stack its team with
ringers. A school accomplishes this by assembling the best crop of
freshmen possible, at least as measured by U.S. News & World
Report’s controversial methodology. And promising merit money is
one sure-fire way to lure promising applicants to a campus.
The use of merit awards isn’t actually as simple as I’ve described
it. In fact, the internal process that schools undertake to achieve the
optimum mix of revenue spent to freshmen bought has its own name:
enrollment management. Campus enrollment managers, sometimes
with the help of outside consultants, will often use the cash in their
own institutional kitties to shape their incoming classes to meet their
own academic and financial goals.
The best article I’ve seen on enrollment management—a practice
that schools would prefer to keep hidden—was written by Matthew
Quirk in the November 2005 issue of The Atlantic. You can read the
illuminating article at the magazine’s Web site (www.theatlantic.com)
by typing in its title: “The Best Class Money Can Buy.”
If you’re a parent with a smart child, the use of merit money will
seem like a promising and equitable development. With the cost of
college so obscene, why should any parents pay full price?
It’s a sentiment that I can completely identify with. In fact, when
my daughter, my husband, and I went shopping for schools, most of
the institutions on our list dispensed merit money. The merit scholarships
my daughter was offered allowed her to ultimately attend her
No. 1 pick—a liberal arts college in Pennsylvania—for close to the
same price at the premier public universities in California where we
live.
The downside of merit money is that at some schools it can drain
coffers reserved for need-based financial aid. This is the cash used for
deserving kids who must cross colleges off their list if they don’t
receive considerable financial help.
In the past, plenty of schools were more willing to hand out full
scholarships to the neediest kids. But today many institutions are more
likely to take what would have been, say, a $30,000 need-based financial
aid package and divide it into three or four merit awards. The
school offers these awards of $7,500 or $10,000 a piece to more affluent
students with solid test scores, which can help with the college’s
rankings and bring in more revenue. Merit awards of this size can
often seal the deal with families who are determined to pocket some
sort of discount. Enrollment consultants can sometimes even predict
how much cash it will take to attract certain categories of kids to a particular
school.
The Education Sector, which is an independent educational think
tank in Washington, DC, blasted this practice in a report that examined
financial aid practices at 50 state flagship universities. “There’s a
ruthless bottom-line logic driving this trend,” the report concluded.
“Poor students bring in far less net revenue than rich ones and do
nothing to burnish an institution’s status in the higher education marketplace.”
Gordon Winston, a professor emeritus at Williams College and
the director of The Williams Project on the Economics of Higher
Education, was even less diplomatic with his assessment. In the
Atlantic article he observed that enrollment management is “a brilliantly
analytical process of screwing the poor kids.” In another publication,
Winston insisted that “enrollment managers are ruining
American higher education.”
The merit aid stampede by public universities that are also gunning
for higher ratings from U.S. News & World Report has especially
alarmed critics. According to Education Trust, the amount of grant aid
awarded to families earning at least $100,000 jumped 406% between
1995 and 2003, while cash given to poverty-stricken families making
less than $20,000 dropped 13%.
It also explains why I wasn’t surprised when I talked to the father
of a bright teenager in New Hampshire for a college story that I wrote
for BusinessWeek. He told me that his daughter, who was a National
Merit Scholarship finalist, had been courted—out of the blue—by the
University of Florida and the University of Oklahoma, which were
both offering her full-ride scholarships. Knowing this, it wasn’t startling
when the annual Chronicle of Higher Education Almanac
2007–2008 noted that the University of Florida had lassoed more
freshman National Merit Scholarship winners (257) than all others
schools except Harvard University (294). The University of Oklahoma
(140) and Rice University tied for fourteenth on the list and beat out
several Ivy League schools.
Here’s another dubious development: Certain schools have jacked
up their price, in part, because some families won’t take a school seriously
unless it costs as much as other comparable schools. A New York
Times article shared the story of Ursinus College in Collegeville,
Pennsylvania, which raised its tuition and fees 17.6% one year after
the board concluded that it was losing applications because families
thought the tuition was too low. After the school raised its tuition, it
received nearly 200 more applications the next year. To soften the
blow, Ursinus increased its student aid nearly 20%.
The article noted that other schools, such the University of Notre
Dame, Bryn Mawr College, Rice University, the University of
Richmond, and Hendrix College also sharply increased their tuition
for competitive reasons while boosting their financial aid.
The critics of merit money practices typically direct their frustrations
at colleges and universities not the families who are angling for
price breaks. Even so, what often gets lost in discussions among industry
insiders is this: Merit money wouldn’t be so critical to so many families
if the cost of college wasn’t continually outstripping the rate of
inflation and the average mom and dad’s salary. Even a family that
makes $100,000 or $150,000 a year is going to have digestive troubles
choking down a $30,000 bill that comes due every September.
Ironically, one reason for runaway tuition at some schools is
because they need a steady stream of cash to provide merit money to
the kids they most covet.
If you won’t qualify for need-based financial aid, it makes perfect
sense to find a school that is not only an academic match but also one
that will reward you for sending your child there. If not, you could end
up paying full price and subsidizing somebody else’s luckier kid. I can’t
imagine anybody wanting to be caught in that position.
Action Plan
• There are many more opportunities to capture a merit award than in the past.
• If your family doesn’t have a shot at need-based aid, look for schools that hand out merit aid.
Source: The College Solution: A Guide for Everyone Looking for the Right School at the Right Price
