快速阅读Colleges taking another look at value of merit-based aid Good grades and high test scores still matter a lot to many colleges as they award financial aid. But with low-income students projected to make up an ever-larger share of the college-bound population in coming years, some schools are re-examining whether that aid, typically known as merit aid, is the most effective use of precious institutional dollars. George Washington University in Washington, D.C., for example, said last week that it would cut the value of its average merit scholarships by about one-third and pare the number of recipients, pouring the savings, about $2.5 million, into need-based aid. Allegheny College in Meadville, Pa., made a similar decision three years ago. Now, Hamilton College in Clinton, N.Y., says it will phase out merit scholarships altogether. No current merit-aid recipients will lose their scholarships, but need-based aid alone will be awarded beginning with students entering in fall 2008. Not all colleges offer merit aid; generally, the more selective a school, the less likely it is to do so. Harvard and Princeton, for example, offer generous need-based packages, but plenty of families who dont meet need eligibility have been willing to pay whatever they must for a big-name school. For small regional colleges that struggle just to fill seats, merit aid can be an important revenue-builder because many recipients still pay enough tuition dollars over and above the scholarship amount to keep the institution running. But for rankings-conscious schools in between, merit aid has served primarily as a tool to recruit top students and to improve their academic profiles. Theyre trying to buy students, says Skidmore College economist Sandy Baum. Re-evaluating aid Studies show merit aid also tends to benefit disproportionately students who could afford to enroll without it. Thats where demographics enter the picture. As we look to the future, we see a more pressing need to invest in need-based aid, says Monica Inzer, dean of admission and financial aid at Hamilton, which has offered merit scholarships for 10 years. During that time, it rose in US News & World Reports ranking of the best liberal arts colleges, from 25 to 17. Merit aid, which benefited about 75 students a year, or about 4% of its student body, at a cost of about $1 million a year, served us well, Inzer says, but to be discounting the price for families that dont need financial aid doesnt feel right anymore. Need-based aid remains by far the largest share of all student aid, which includes state, federal and institutional grants. But merit aid, offered primarily by schools and states, is growing faster, both overall and at the institutional level. Between 1995-96 and 2003-04, institutional merit aid alone increased 212%, compared with 47% for need-based grants, a study by Pennsylvania State University professor Donald Heller says. At least 15 states also offer merit aid, typically in a bid to enroll top students in the states public institutions. But in recent years, a growing chorus of critics has begun pressuring schools to drop the practice. Recent decisions by Hamilton and others may be a sign that people are starting to realize that theres this destructive competition going on, says Baum, co-author of a recent College Report that raises concerns about the role of institutional aid not based on need. A fast merry-go-round David Laird, president of the 17-member Minnesota Private College Council, says many of his schools would like to reduce their merit aid but fear that in doing so, they would lose top students to their competitors. No one can take unilateral action, says Laird, who is exploring whether to seek an exemption from federal antitrust laws so member colleges can discuss how they could jointly reduce merit aid. This is a merry-go-round thats going very fast, and none of the institutions believe they can sustain the risks of trying to break away by themselves. A complicating factor, he and others note, is that merit aid has become so popular with middle-income families, who dont qualify for need-based aid, that many have come to depend on it. And, as tuitions continue to increase, the line between merit and need blurs. Thats one reason Allegheny College doesnt plan to drop merit aid entirely. We still believe in rewarding superior achievements and know that these top-notch students truly value the scholarship, says Scott Friedhoff, Alleghenys vice president for enrollment. Emory University in Atlanta, which boasts a $4.7 billion endowment, meanwhile, is taking another tack. This year, it announced it would eliminate loans for needy students and cap them for middle-income families. At the same time, it said it would expand its 28-year-old merit program. Yeah, were playing the merit game, acknowledges Tom Lancaster, senior associate dean for undergraduate education. But it has its strong points, too, he says. The fact of the matter is, its not just a