Universities trying to boost their rankings often use merit-based scholarships -- awarded to students with high SAT scores, grades, etc. -- to entice students to enroll. The argument for this practice is that it improves the school's profile, the quality of its students, and need not take away from need-based financial aid. Supporters say need-based and merit-based aid can co-exist.
But according to Inside Higher Ed, a new report shows that schools that begin offering merit-based aid see declines in the enrollment of blacks and recipients of Pell Grants, need-based grants provided by the government.
Three to five years after colleges start offering merit aid, the percentage of Pell Grant recipients starts to drop at middle and top tier colleges (as measured by selectivity, using SAT scores as a proxy.) Six to 10 years after starting to offer merit aid, these colleges have seen their percentage of Pell Grant recipients drop by an average of five percentage points. ... In the immediate few years after merit aid starts, there is not a notable impact on the enrollment of black students.
The authors of the paper attribute this to "crowding out"; the more "qualified" students are offered financial incentives to attend, taking up spots that would otherwise be taken by the less "qualified" ones, who disproportionately come from low-income and minority backgrounds.
Here lies the real problem: "merit" is often a proxy for privilege. SAT scores are better indicators of wealth than of potential for success: students whose families raked in more than $200,000 had a math score over a hundred points higher than those whose families earned under $20,000. And as Dana argued, they are also worse predictors of success than measures like grades, which are better suited to gauge how well a student has done with the institutional resources offered to her.
But there is a distinction to be made here between merit-based admission and merit-based financial aid. Whether or not SAT scores and grades are accurate measures of a student's academic potential, they should not be used for distributing financial aid. Once a school has admitted a student, it has made a reasonable determination that he or she is likely to succeed there -- even if the way in which schools determine this is problematic. Doling out funds based on merit beyond this assessment is inefficient. After a certain threshold, grades and SAT scores are simply indications of wealth and privilege. In effect, what these schools are doing is continuing the legacy of advantages for the wealthiest children, distributing finite financial aid resources to families with high incomes.
It is unfortunate that children from poor backgrounds are much less likely to be prepared for college success. But it's even more unfortunate that when they do succeed, higher education turns out not to be a "great equalizer" but the same unjust system despite which they have succeeded.