Merit-based Aid and Need-based Aid
Dolye (2010) investigates whether state spending on two types of aid programs, merit- and need-based aid in general and merit-based aid in particular “crowds out” need-based aid. Doyle delineates first-order effects: changes in enrollment, and second-order effects: declining state support, of the advent of merit-based state financial aid programs (Doyle, pg. 397) and ultimately concludes that “Given the models and specifications identified in this analysis, there is no detectable impact of merit-based aid on changes in need-based aid” (Doyle, pg. 412).
In “Financial Aid Through a Bourdieu-ian Lens: Inequality Perpetuated or an Opportunity for Change?” Gieser (2012) begins his article with the acknowledgment of the inherent complexity of financial aid (Gieser, pg. 9). Indicative of such complexity, Gieser notes that the terms and concepts need and merit require definition as they have become increasingly blurry and should be fully fleshed out to enable careful considerations by institutions who pass policy for financial aid programs (Gieser, pg. 9). Gieser goes on to assess, however: “Defining and determining need is not a straight-forward procedure. In the world of financial aid, simplistic answers are quite likely the wrong ones” (Gieser, pg. 9).
In “Does Merit-Based Aid “Crowd Out” Need-Based Aid?” Doyle (2010) emphasizes that prior to the advent of merit-aid (aid provided to students who meet some form of academic criteria), the vast majority of state aid was provided on a need-based basis (Doyle, pg. 397). Doyle outlines: “The majority of modern need-based state aid programs began with the establishment of the State Student Incentive Grant (SSIG) program in the 1960s and 1970s. Before the federal government created SSIG, only 16 states had a need-based program. Within 20 years all states in the nation had some form of need-based aid” (Doyle, pg. 398).
Briefly summarizing the history of need-based programs, Doyle (2010) details the advantages of need-based state aid,
First, as decades of research have shown, lowering the price of higher education results in
higher levels of attendance. Low-income students are more price-responsive than their peers, and so programs that focus on lowering the price for these students will induce more students to attend than other forms of financial aid. As a result of their focus on the neediest students, these programs are efficient. This efficiency means that these programs are more affordable for the state as a whole than other, more broad-based subsidies (Doyle, pg. 399).
As with most things, however, advantages beget disadvantages, and need-based aid programs are certainly not without issue. Doyle (2010) addresses the downside of need-based state aid,
Many need-based programs have suffered from a loss of purchasing power
(defined as the proportion of tuition and fees covered by grant aid). Griswold and Marine (1996) find in their case study that need-based aid can be more easily cut than appropriations to higher education since few understand or are affected by need-based aid programs in the states. Last, these programs suffer from the same concerns about complexity as federal programs (Doyle, pg. 399).
State legislation and financial aid policies began to shift from need-based state aid programs to merit-based state aid programs in 1993 with Georgia’s HOPE (Helping Outstanding Pupils Educationally) scholarship (Heller, pg. 6; Dolye 2010, pg. 400). Doyle (2010) points out: “Since Georgia’s foray into broad based aid, 22 other states have also adopted some form of a merit aid program. The rapid growth of these programs in the 1990s has slowed in the last few years” (Doyle, pg. 400). But, “as of 2007, 16 states had adopted broad-based merit aid programs” (Doyle, pg. 398).
Briefly highlighting the background of merit-based aid programs, Doyle (2010) indicates the strengths of these programs,
State merit aid programs have increased enrollment. As with any other reduction in the
price of higher education, a lower price means more students will enroll.
However, these programs do appear to affect enrollment more in 4-year institutions than
community colleges. Beyond simply lowering the price of higher education for many students, these programs have much lower levels of complexity. Case studies suggest that students in high schools have higher levels of knowledge regarding these programs (Doyle, pg. 401).
However, similar to need-based state aid programs, merit-based state aid programs are not without problematics. Doyle enumerates the disadvantages of merit-based state aid programs,
The primary disadvantage of merit-based programs is that they focus aid on a group of students who most likely would have gone onto higher education without any additional aid. As a result, these programs do little or nothing to address long-standing gaps in college attendance, whether by race or by income level. In fact, Dynarski (2000) finds that the HOPE scholarship actually increased gaps in enrollment by race and ethnicity in Georgia. Many of these programs also require students to maintain a certain GPA while enrolled in higher education. Programs like New Mexico’s Lottery Success Scholarship and Tennessee’s Education Lottery Scholarship have seen low levels of retention of the scholarship, and many students who do not retain these scholarships do not persist in higher education (Doyle 2010). Implications and considerations of both need- and merit-aid require further review.
As scholars Gieser and Brown, among others suggest, need- and merit-based state aid program issues reflect, more broadly, the problems of the financial aid system and the American educational system as a whole, including the politics associated with providing aid, formulating metrics for doling out aid, analyzing data for evaluating these programs, among several others. These issues raise several complicated questions.
For example, is it ever possible to have enough aid for the needy? How does need-based state aid differ from student to student, institution to institution, private to a public institution, state to state? How do policymakers arrive at the dollar figures per student? How do policies and legislation at various levels, i.e., at the federal, state, and local levels, impact overall national and state financial aid programs and policies? How do policymakers and administrators measure the success and shortcomings of need-based aid programs? When other aid-based alternatives arise, such as different iterations of merit-based aid programs, how well do need-based state aid programs fare? Consequently, how do alternative state aid programs affect need-based state aid? These questions, although not necessarily directly addressed in my article critique (nor in the literature I reviewed), they do provide questions and additional research to undertake regarding need-based aid programs.
Additionally, how do institutions balance need-based and merit-based aid, ensuring that merit-based aid doesn’t disproportionately receive more funding than need-based programs? Indeed, Doyle (2010; 2012), among others: Gieser (2012) and Brown (2007), question whether merit-based state aid drains the resources of state funding. Referencing Heller’s 2004 article, “The Changing Nature of Financial Aid,” Gieser (2010) specifies: “Some argue that the increased use of merit-based financial aid drains resources from those students who most need them” (Gieser, pg. 9). Gieser advances: “Research suggests that merit-based aid programs award aid disproportionately to affluent, white students who would have attended college even without financial assistance” (Dynarski 2004, Heller 2002). In essence, the increased focus on merit-based aid programs since the 1990s robs Peter to pay Paul” (Gieser, pg. 9-10).
In “Is Merit-Based Student Aid Really Trumping Need-Based Aid?” Heller (2002) addresses the importance of “looking beyond numbers to try to discern the intent and likely future direction of policy-makers” (Heller, pg. 6). Heller points out an equally important question: “whether merit scholarships actually meet the policy goals established when the programs were originally created” (Heller, pg. 6). Heller also insightfully stresses “the distinction between promoting academic achievement and rewarding it is an important one” (Heller, pg. 7).
Furthermore, Doyle (2010) notes a few important considerations regarding merit-based state aid programs, including: “Rewarding students for high levels of academic performance has been a historic goal of scholarship programs. However, the broad-based merit aid programs adopted in the 1990s were qualitatively different than their predecessors, in that they provided substantial financial assistance for very modest levels of student achievement” (Doyle, pg.400).
Another concern regarding aid-based financial aid programs is the politics of legislation that govern financial aid policy. What politics at play impact financial aid policy? As Doyle points out in, his 2012 article, “The Politics of Public College Tuition and State Financial Aid,”
The policies of states differ in terms of how public and private institutions of higher education are financed. In some states, appropriations are provided at a certain level and institutions are allowed to bring in revenues from all other sources as they see fit. In other states, policies are in place to fund a certain number of students or a certain percentage of overall costs. In still other states, policies limit revenue from other sources, particularly tuition. In all cases, state decisions about the level of funding to provide to higher education and their degree of involvement in the process of collecting revenue translate into a direct effect of state policy on tuition and financial aid policy (Doyle, pg. 619).
The above politics are just the tip of the proverbial iceberg as other factors, such as differences between public and private tuition, regional differences, prices set by states themselves, all impact financial aid policy at the state level (Doyle 2012). Doyle goes to display just how the
The findings in (his) paper provide further evidence that higher education policy is the result of a political process. In addition, this work demonstrates that the motives of the political actors in this process are not uniform—institutions and policymakers all have heterogeneous motives, which play out in particular state contexts. Higher education policy, while complex, can be understood according to appropriately developed models of human behavior based on an understanding of incentives and rewards.
Moreover, using merit-aid more effectively and creatively could be used to attract more out of state students. For example, disaggregating merit-aid from merit itself, rather, awarding aid on other factors, such as demographics, to encompass wider groups and provide more access opportunities, could bolster enrollment opportunities, such as access and equity (Gieser 2012).
While aid-based state financial aid programs demonstrate the complexity and present issues for policymakers, administration, faculty, students, both programs more generally reflect concerns that should be addressed institutionally and within society at large. Gieser connects the economic, cultural, and social elements through the central role of the distributive process to higher education, particularly financial aid process and need-based and merit-based aid programs (Gieser, 2012). Gieser finds that merit-based aid is a means of maintaining the already established power structures within society (Gieser, pg. 11). Furthermore, Gieser argues that “Without adequate levels of need-based aid, however, fewer and fewer of the kinds of students who have been traditionally underrepresented and underserved by America’s colleges and universities may ever make it to college,” which reinforces the uneven playing field of American higher education, but also the other capital deficits these students may have” (Gieser, pg. 14).
Gieser also views the opportunity to reexamine aid-based financial aid programs as an opportunity for growth, improvement, and learning where institutions and administrations can lead others, including states, policymakers, and legislators. Improvement in these areas of higher education, specifically in the financial aid arena, where the importance of ideals of access, equity, equality, opportunity are central, could spark change in other realms, including, more broadly, and perhaps, more importantly, the economic, cultural, and societal (Gieser, pg. 12).
References
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Doyle, W. (2010). Changes in Institutional Aid, 1992-2003: The Evolving Role of Merit Aid. Research In Higher Education, 51(8), 789-810.
Doyle, W. (2010). Does Merit-Based Aid “Crowd Out” Need-Based Aid? Research In Higher Education, 51(5), 397-415.
Doyle, W. R. (2012). The Politics of Public College Tuition and State Financial Aid. Journal Of Higher Education, 83(5), 617-647.
Gaudiani, C. L. (2000). The Hidden Costs Of Merit Aid. Change, 32(4), 19.
Gieser, J. D. (2012). Financial Aid Through a Bourdieu-ian Lens: Inequality Perpetuated or anOpportunity for Change?. Journal Of College Admission, (216), 8-14.
Griffith, A. L. (2011). Keeping up with the Joneses: Institutional changes following the adoption of a merit aid policy. Economics Of Education Review, 30(5), 1022-1033.
Heller, D. E. (2002). Is Merit-Based Student Aid Really Trumping Need-Based Aid? Another View. Change, 34(4), 6.
Ness, E. C. (2010). The Politics of Determining Merit Aid Eligibility Criteria: An Analysis of the Policy Process. Journal Of Higher Education, 81(1), 33-60.
Shireman, R., Baum, S., & Steele, P. (2012). How People Think About: College Prices, Quality, and Financial Aid. Change, 44(5), 43-48.
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