<p>Perhaps it would have been better to title your thread ‘high tuition, high aid’ model: good for business???</p>
<p>Then it would have fit better with the discussion in the <em>Atlantic</em> article. I don’t see why ‘socialism’ or ‘social justice’ was brought in at all, since as you point out, the issue of merit aid to students of higher income families muddies the waters in the sense that when people hear ‘aid’, they tend to think only of need-based aid.</p>
<p>But the business metaphor that is constantly applied to education, especially here on CC, (education is a ‘product’, you need to think about ‘return on investment’, students are ‘customers’ etc) has its limits. It is a useful metaphor, but shouldn’t be the only one used when thinking about education.</p>
<p>You have an extremely narrow definition of “elite”, since nearly every top Uni but 7 Ivies and MIT offer merit aid. (Even Cornell has a small merit program, which are not that well known (for NYS residents only?), and of course, Stanford offers plenty of aid to athletes who “merit” it.)</p>
<p>I didn’t say these colleges don’t rely on tuition to fund part of their operating expenses. Even HYPSM do that. But you’re missing the point. If it costs the college $70,000 per student to run its educational operations, and full tuition is $45,000 per student, then those paying the full $45,000 are not subsidizing those who are paying only $10,000. Then all students are being subsidized by the college from non-tuition sources of revenue, some to the tune of $25,000, and some to the tune of $60,000.</p>
<p>The real question is how “sticky” the poverty is between generations (i.e. how likely it is for someone born into a poor family to become non-poor as an adult), and whether that relates to the various states’ public university tuition and financial aid policies.</p>
<p>Where merit aid is offered, it is offered to those who qualify, regardless of family income, isn’t that correct? Merit aid can’t be considered a subsidy for wealthier students.</p>
<p>For colleges that claim it actually costs $60-70K to educate their students, and therefore they are giving everyone a break…I find that really hard to buy. Either they are really mismanaging their resources, or they are spending a lot of money building some overly expensive digs. i suppose they could be full of it, and finding a way to justify charging more than necessary for tuition. There is a pride factor for many of these schools to charge high tuition, they do it because they can, and people are willing to pay it. If they couldn’t get anyone to pay the full price, they’d lower their tuition. If the applications weren’t rolling in at record rates, they’d be forced to cut the prices.</p>
<p>I figure this entire scheme with massively rising tuition, some people getting a cheap deal while others pay full freight, is a social justice program combined with a business model. It’s much like taxes, they get the money where they can, and they can’t get it from those who aren’t making it. While providing special deals to those they really want, via merit aid. They also get far more students to apply by offering fa, which is probably the top goal…increase the applicants, lower the acceptance rates, move yourself up on the list of elite and desirable schools. A larger pool to pick from should also raise their stats.</p>
<p>Northwestern has a small handful of merit scholarships in the music school (=irrelevant to the vast majority of applicants), but generally speaking, does not offer merit aid, only need-based aid.</p>
<p>It is more of a business model. Look up “price discrimination” from an economics textbook.</p>
<p>Simply put, they want to find the highest possible price that will be acceptable to each given student. Obviously, the better students will have more choices, so lowering their prices (merit scholarships) is used to entice them to attend. The students from poor families may not attend college at all if the price is too high, so their prices are also lowered (need-based financial aid) to entice them to attend.</p>
<p>Meanwhile, students from wealthy families who are in the lower end of the class in terms of academic credentials are probably glad to get into the college (as a “reach” for them), so they are more likely to pay list price. So the college does not discount their prices.</p>
<p>Except for the fact that as a group, students from wealthy families score higher on the SAT/ACT than students from lower income families. Since most merit scholarships are tied to SAT/ACT performance, as a group, students from higher income families are more likely to get this form of ‘discounted’ tuition than students from lower income families, and this particular form of ‘tuition discounting’ tends to go to higher income families.</p>
<p>So let’s say a college only offers merit money (which basically the U I work for does). The students from higher income families are more likely to get a merit award, and thus will be paying less than the sticker price than the students from lower income families, who are more likely to be paying the full fare. Thus, the students from lower income families are subsidizing those students from higher income families.</p>
<p>“Except for the fact that as a group, students from wealthy families score higher on the SAT/ACT than students from lower income families. Since most merit scholarships are tied to SAT/ACT performance, as a group, students from higher income families are more likely to get this form of ‘discounted’ tuition than students from lower income families, and this particular form of ‘tuition discounting’ tends to go to higher income families.”</p>
<p>That may be a outcome of merit aid, but I’d make the assumption that they are offering merit aid to people specifically because of very high SAT/GPA’s,in order to make their stats look better, and to attract students whom they think will do very well and have other options. Not to attract rich students and give them a discount at the expense of lower income families.</p>
I believe most schools have a fixed financial aid budget - it is a zero sum game.</p>
<p>If I get a smaller subsidy because I pay more, and that allows the school to give you a bigger subsidy so that you can pay less, then I am still subsidizing you. It doesn’t matter if what I am paying covers the full cost or not.</p>
<p>
Or forever. To be free for all undergrads would require around 1% of Harvard’s endowment per year.</p>
<p>“It is more of a business model. Look up “price discrimination” from an economics textbook”</p>
<p>I don’t disagree with that. I just think there is a social justice component as so many colleges are always boasting about their financial aid numbers and how benevolent they are. Of course, maybe that just is their business model. But if they were trying to purely get the most out of everyone, many schools would be accepting predominantly full pay students with lower stats.</p>
<p>Schools may worry that they will lose public support and potentially their tax exempt status (and tax exemption for donations) if they are seen as serving only the rich. So they have several reasons for wanting to foster socioeconomic diversity in their student bodies.</p>
<p>Another thing to consider is that not all expenses that are charted as “educational expenses” are indeed so. One example is expenses with admissions. A big part of it is truly marketing and does not ad an iota to the student’s educational experience.</p>
<p>“But if they were trying to purely get the most out of everyone, many schools would be accepting predominantly full pay students with lower stats.”</p>
<p>No because after all, they are academia. Schools still want to report high stats to USNews and other ranking agencies, still want their students to go to good graduate schools, get Fulbrights and Rhodes, get good jobs after graduation.</p>
<p>Sure, the kids from the “captain of industry” can still work in the family business, but the kid of the successful MD… Not so much.</p>
<p>Also, I take that faculty do prefer to teach interested/intelligent kids over the completely disengaged kids.</p>