Billions in Tuition Aid Going to Well-Off Students

According to figures from the College Board, as reported by USA Today, colleges and universities are awarding over 5 billion dollars annual in tuition grants to students whose families make up to $200,000 a year - and who plan to pay in cash for the cost of attending college. At the same time, the percentage of aid going to needy students has declined over the last decade.

The strategy is not unlike department stores that use discounts to encourage customers to spend. "Giving $5,000 against a $25,000 tuition charge is just like the discounting you'd see in a retail operation to bring traffic to the door," says Jonathan Burdick, dean of financial aid and admissions at the University of Rochester.

I can attest to this trend personally. When I applied to 7 colleges in 2002, I never filled out a single financial aid form nor scholarship application. My grandparents had set aside a college fund for me with more than enough to cover undergrad tuition at any university. I intended to pay for tuition in cash, which I assume each university knew, based on my applications.

Still, three of the schools that accepted me offered me scholarships and/or grants toward tuition. That was a big reason I chose a private school in Texas over a more elite school in the southeast which had accepted me. I was going to get $5K per year ($2,500 a semester) in grants. That $20K discount on 4 years of tuition was a big enough reason for me to pick one school over the other - since I'd get to keep whatever was left in the college fund, after all.

Schools are claiming that because the Ivy Leagues are giving aid to the wealthier students (in order to lure or buy those with the highest scores and best resumes) that they are pressured to follow suit.

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