<p>New study conducted by the Cornell Higher Education Research Institute attempts to discern the true merit of merit scholarships, including student- and parent-behavior "beyond financial to the perceived "scholarship" or "price illusion" effect, in which students feel good about being identified as being special or saving money, and so may be responding to more than the money."</p>
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Merit scholarships have a real impact on the yield of top admitted students, but unless those scholarships are exceptionally large, the yield is likely to remain small. That is the conclusion of a new study of an unusual experiment in which a private college created a random sample and control group to test the effectiveness of merit awards.</p>
<p>The rapid growth in merit scholarships has been controversial: Many institutions (public and private) say that the awards allow them to better shape their classes and to attract talented applicants who might otherwise go elsewhere. Yields - the percentage of accepted applicants who enroll - go up. Critics have said that merit scholarships may help institutions, but don't truly help students (most recipients of merit scholarships have many options) or broad social needs in higher education (the merit awards divert attention and funds from the needs of low-income students). Amid this debate, many institutions are standing by their merit scholarships, while others are scaling them back or abandoning them...
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In his study, Monks took advantage of the decision of a private university to undertake a true experiment with merit scholarships. This university decided to offer $7,000 renewable merit scholarships (about 17 percent of tuition, room and board and fees) to 230 of its top rated applicants. But rather than offer the grants to those at the very top, the institution offered them completely at random to a subset of a larger group of applicants who had been identified as being at the top of the pool of those admitted. ...There were 319 admitted applicants who were thus judged equally desirable as the first group, but who by random choice received nothing extra from the university.
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Well, that certainly would have caused a near-riot over here on the CC-boards. Random selection of merit awards..... LOL</p>
<p>(Note: The college is not identified in the study, but the article suggests that it was the University of Richmond -- this all took place in 2005)</p>
<p>Maybe some don't need it, but in this family the merit scholarship really was important. My son would have had much more limited options academically without merit scholarships.</p>
<p>My daughter has been offered merit scholarships as high as 20K, but then they give her less need-based aid, so we still can't afford the school!</p>
<p>EFC based on institutional criteria = 12K, yet schools expect us to pay 25K
Makes no sense.</p>
<p>I understand what's going on, and I am on record as stating I would rather get a $10k discount off of a $35k college than pay full price at a $25k school. Perhaps it's the knowledge that someone else is paying full freight? Maybe it's the warm and fuzzy feeling from the scholarship letter that states, "The reason we are offering you this scholarship is because we want you here!" I think merit aid is a wonderful thing and an essential tool for many colleges to create the diversity that they all strive for. A college can't have only dumb rich kids, and smart poor kids.</p>
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A college can't have only dumb rich kids, and smart poor kids
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I'd suggest you may want to reconsider the first half of that comment ... there are real people in this forum .... kids and their parents who will read it and (in my opinion rightly) take offense.</p>
<p>If I like two schools equally, I would definitely choose the one that made it clear they wanted me as a student over the school that, besides sending me an acceptance, acted indifferently. Add the amount of the merit scholarship into your decision, and there you go. In many cases, of course, the merit scholarships are at lower tier schools, and that must be factored into the decision. For two schools of equal rank, though, it looks pretty simple to me.</p>
An additional wrinkle: The $7,000 merit award matched the size of a one-time tuition increase the university had made in 2005, as part of a strategy to reposition itself.
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<p>Including the $7,000 tuition increase, the total costs increase was $8,600, "$31,910 to $40,510, or approximately 27 percent."</p>
<p>U Richmond announced such an increase on October 15, 2004, and the identical $40,510 figure was included in that announcement. So it indeed safe to assume UR is the school where the experiment took place. I don't have a problem with the conclusions based upon 2005 inter-year experiment, but I wonder about the 04 vs 05 experiment in which, "[t]he enrollment rate of 7.1 percent for the fall 2005 class is not significantly higher than the enrollment rate of 5.2 percent for the previous year?s cohort."
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There are, however, competing models of consumer behavior that argue that the framing and context of prices play a significant role in determining consumer responses to prices.
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I'm not sure the study gives proper "framing and context" to the sticker-shock effect of the price increase itself. Wouldn't this screen out some of the price-sensitive applicants resulting in a pool of no-aid applicants that was influenced less by merit aid given to preserve net cost? So what was the consumer response to UR's price increase, which was announced one month before the first ED deadline? Applications in 2005 at UR fell 7.3% over 2004 and the acceptance rate rose from 39.7% in 04 to 47.5% in 05. Did the 27% price increase scare away some applicants? Did UR expect a lower yield from the 05 applicants and make adjustment by accepting more students? I think so. Even with a higher acceptance rate in 05, the number of wait-listed students admitted was 267 on 05 vs. 99 in 05.</p>
<p>I'm not trying to hijack this thread, but I'm much more concerned with the disbursement of athletic scholarships than merit scholarships. My daughter worked exteremely hard throughout her high school career and was offered admission to some extremely good colleges and was also offered merit scholarships to a couple good LAC's. Three weeks ago, we visited UVA and toured the campus with a current member of the lacrosse team who's from outside Virginia and his family lives about 25 miles from us. We were very happy to meet this very nice young man (a senior) and have the opportunity to walk around the campus with him. However, he really had no idea of where we were going on campus and didn't know what many of the buildings housed. My daughter is a voracious reader and asked him some questions about the libraries. He said he couldn't really tell her much about them since he "hasn't spent much time at all there." He then confided in us that he "came to UVA for lacrosse, not for the education." He has a full ride scholarship to one of the best public universities in our country and my daughter, being an out of state, will probably have a very difficult time gaining acceptance. So, I applaud the schools that offer students who work their butts off the opportunity to reduce their indebtedness with well deserved merit scholarships.</p>
<p>^but the athletes are there to bring attention and money to the institution, so that people like your daughter can reap the benefits of the top-notch academics. It's a price that must be paid.</p>
<p>^^
Geez Louise, who picked that guy to be a "tour guide?" At UF, they have to go through an interview process and then become experts on the sights and sounds of the entire campus.<br>
Stuff like that makes me lose confidence in the competency and integrity of a university.</p>
<p>I think most universities have an interview process and some sort of training for their tour guides, but most also don't seem to screen that well. We had a few real doozies, from the very articulate Georgetown girl, who prefaced her little group tour with, "Let me first tell you a little about myself . . . " and then went on to talk about all her (admittedly outstanding) accomplishments throughout her entire life, as I remember. While her accomplishments were certainly impressive, her approach was a real turn-off. She then led a tour that lasted nearly two hours--a serious hike. People who weren't in physically good enough shape simply couldn't make it. People were dropping like flies. No handicap access, anywhere--at least none that she chose to take. The whole tour was a little weird. We went to another top school, where the tour guide made sexist jokes and trashed a couple of Ivy schools he viewed as competitors, I guess. Again, an amazing turn-off. Sounds superficial to base some of your impressions of a school on a tour guide, but they're definitely representatives.</p>
<p>Interesting study. However, the part that purports to test the psychological impact of the award is flawed to the point of being meaningless. Since this entire period is one of rapid escalation in college costs, the prices offered by the unnamed college's competitors also presumably increased, at least somewhat, between the two periods. As a result the data are exactly what one would expect even in the absense of any psychological effect. The rest of the study seems ok.</p>
<p>But this doesn't have to be called "merit aid". It is precisely the strategy Princeton is using in it "no-loans" policy to secure acceptance by those in the $100-$160k category who might otherwise be attracted by so-called merit aid elsewhere. It works too.</p>
<p>The difference was that the experiment was conducted from a sample taken from the cream of crop, rather than one selected on the basis of lowest income. If they ran a similar test using random selection from the FA pool I suspect that they would get an even larger impact in terms of yield. But the point of merit aid is to increase yield among the most qualified students.</p>
<p>^^But Princeton's no-loan policy benefits every income level, and I seriously doubt that they are offering students in the $100,000-$160,000 income bracket the $25,000/yr that they could probably get at a merit aid school. As far as I know, those families still have to demonstrate some sort of need--unless you have evidence otherwise, which I would like to see if you do. </p>
<p>I understand the concept of what you are saying, but I don't think that it is a perfect analogy. Being that Princeton is literally swimming in money, it's seems like their no-loan policy is warranted.</p>
<p>Advantagious is right, I think, if you read the fine print on most of the extensions of grant aid to middle income groups, you find that asset restrictions still apply. My guess is that the press relations aspects of these changes are more significant than the actual impact on aid.</p>