​T he Dangers of Awarding Merit Scholarships

The awarding of merit scholarships is a dangerous practice for colleges and universities in many ways. For most colleges and universities, student financial aid is the fastest growing expense item. Each year, more colleges are less able to provide full financial aid support for all admitted students who are needy. Awarding merit scholarships exacerbates these problems. 
Some higher education officials argue that merit scholarships and so-called need-based scholarships come from different pots of funds.
The truth is that for the vast majority of institutions, a dollar spent on merit scholarships is a dollar that otherwise could be invested in support of the economically deserving student. I have no doubt that awarding merit scholarships to students who aren’t needy is a major factor in rising tuitions, a chicken and egg scenario.
Others in academia suggest that if scholarships based on athletic prowess are appropriate, surely scholarships based upon academic prowess are more appropriate, I think not. The system of college athletic scholarships is hardly one that we can be proud of; given widespread misuse and abuse and the dismal rate at which athletic scholarship winners earn degrees, the system provides no useful model.
This form of tuition discounting, not based on financial need, but on SAT scores, is overpoweringly seductive to colleges that are seeking to upgrade the academic prowess of its student body and that in the absence of such discounting, there would be an unenrollment of student with high SAT scores. If in the long term, competition requires all colleges to “buy” their best students with merit scholarships, higher education’s already formidable financial challenges may become overwhelming, particularly for the less well-endowed and under enrolled institution. 
How will administrators and governing boards respond to the chorus of criticism about excessive tuition increases, particularly when critics figure out that a major impetus for these increases is the subsidy inherent in merit scholarship programs? How effective will the pleas to legislators be for more generous funding of need-based scholarships when they realize that colleges are using their own resources to attract students who do not qualify for them?
The growing practice of granting merit scholarships is destructive to the country’s higher education system, and will, in the long run, reduce access for academically able but financially disadvantaged students. The nation can ill afford these social costs.