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Colleges Have Increased Financial Aid, Mostly for Higher-Income Students, Report Says


Four-year colleges have increased their financial-aid offerings in the past decade, but students with the highest incomes have received the largest increases, according to a new report by the U.S. Department of Education.

The report, titled "What Colleges Contribute," finds that institutional aid to undergraduates -- the amount paid directly by the colleges themselves, rather than from state, federal, or other sources -- has increased at both public and private colleges. In the 1992-93 academic year, 17 percent of students at public colleges received such aid, averaging $2,200 per student, according to the report, while in 1999-2000, 23 percent received aid and the average award grew to $2,700. At private colleges, 47 percent of students got financial aid in 1992-93, averaging $5,900 per student; the percentage rose to 58 percent in 1999-2000, with an average award of about $7,000.

Most of those increases appear to have gone to students with the highest incomes, the report says. At private colleges, the proportion of students in the highest income group receiving aid rose from 41 percent in 1995-96 to 51 percent in 1999-2000, while no noticeable gains occurred in the lowest-income group. At public colleges during the same period, the percentage of highest-income students receiving financial aid grew to 18 percent from 13 percent, with no change in the lowest-income group. The average amount of aid also increased far more for high-income students than for those with low incomes.

Most of the increases in financial-aid awards at colleges have been given out based on merit rather than need, according to the report. It notes that while tuition rose during the 1990s, enrollment remained essentially stable. This combination put pressure on colleges to offer merit aid regardless of need, it says, in order to attract and enroll meritorious students who otherwise might not attend.

Sandy Baum, a professor of economics at Skidmore College who tracks financial-aid trends, said the report "really confirms the changing distribution of aid, and the increasing of aid going to higher-income students." Lower-income students lose out under the new policies, she added.

"The schools are more and more using aid to attract a student body that appeals to them and increase their net revenues," Ms. Baum added.

2004 College Advisor of New England