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Econ Quote Fest

The Boston Globe article on the increasing use of merit-based aid in college admissions is a veritable quote fest of Eph-related professors of economics. The article notes that:

As college becomes less affordable for many Americans, public and private institutions nation-wide are spending more of their money on people like Biehl — high-achieving students, generally from middle- and upper-middle-class families, who help bolster the schools’ reputations and rankings. Though the practice of offering aid to the most impressive students has brought payoffs in the college rankings for some schools, including Northeastern, many researchers say it is hurting students from poorer families.

“More and more schools have been shifting financial resources from poor kids to well-off kids,” said Gordon Winston, a Williams College economist who studies the financing of higher education. “They are moving away from a real sense of mission and egalitarianism to scrambling for high-quality students so they’ll do better in US News.”

Although the increasing importance of merit-based aid has been a recurring theme at ephblog, I had no idea that it had doubled in the last 10 years.

As colleges have become increasingly business-savvy, they view financial aid as much from a strategic “enrollment management” perspective as a charitable one, said Michael S. McPherson, former president of Macalester College, who researches college pricing.

“They think of it the way airlines price seats or Wal-Mart prices products,” he said. “It becomes more like `Let’s Make a Deal’ than the cloistered halls of academe.”

Older Ephs will recall that McPherson was a professor of economics at Williams prior to his move to Macalester. The Williams Economics department of the 1980’s featured two olther professors who went on to college presidencies — Steve Lewis at Carlton and, of course, our own Morty Schapiro.

It seems clear to me that the logic outlined by McPherson (and by several of the papers at the Williams Project of the Economics of Higher Education) is undeniable. Merit-aid will play and larger and larger part of the economics of higher education in the years to come. Since students are as much an input to the process as they are consumers of the result, high quality students will be in greater and greater demand.

Even staunch critics of merit scholarships don’t blame individual schools for using them.

“If I were president of those institutions I might be doing the exact same thing,” said Williams College president Morton Owen Schapiro, an economist. “The individual private interest of many of these campuses is increasingly at odds with what promotes the public good.”

I am not sure that the article is correct to label Morty a “staunch critic” of merit-based scholarships. While it is true that you need to demonstrate “financial need” to get a Tyng, my understanding was that a Tyng gives you a free ride, even if you could afford to pay a little. Also, the fact that a Tyng provides funds for graduate school can hardly be described as anything other than a financial inducement to attend Williams.

To my mind, that is a good thing. Williams is ill-served by pretending that it does not give out merit-based aid. I wonder how long it will be able to keep up the charade. (Or do I have my facts wrong about the Tyng?)