‘Merit Scholarship’ or Enrollment Incentive?

Inside Higher Ed

Liam Knox

December 11, 2023

Merit scholarships are widely seen as exactly what their name suggests: financial awards institutions dole out to deserving students based on proven academic achievement.

But a growing chorus of scholars and higher ed experts believes that deepening enrollment challenges have turned those scholarships into something else entirely: tuition discounts colleges use to lure students away from the competition.

“The term ‘merit aid’ is really a misnomer for noncompetitive institutions,” said Robert Massa, vice president emeritus for enrollment at Dickinson College and the co-founder of the consulting firm Enrollment Intelligence Now. “It’s a competitive pricing strategy. And it’s really gotten out of hand.” (This paragraph has been updated to correct Dickinson’s name; it’s Dickinson College, not University.)

The strategy has grown more common at public universities as state funding has decreased over the past two decades, prompting institutions to look to higher-paying out-of-state students to fill empty seats. From 2001 to 2017, spending on non-need-based aid at public institutions rose from $1.1 billion to $3 billion, and 52 percent of public institutions more than doubled their merit aid spending, according to data from New America; over 25 percent more than quadrupled it.

Often, Massa said, out-of-state students who receive merit scholarship still pay significantly more than residents, and the extra aid can push an applicant toward one particular public institution over a selective private.

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