Millions of students will soon arrive on college campuses, full of excitement and trepidation about what’s to come. Some will have received a special gift: a grant, known as merit aid. That’s different from the financial aid that goes to students who can’t afford the sticker price. Merit aid is in effect a signing bonus, a cash incentive to attract the most desirable students.
So who counts as desirable? These bonuses were originally intended for students with exceptional academic achievement, people who could contribute to the campus environment and who have many admissions offers to choose from. Today, however, colleges and universities are increasingly using these grants for a very different purpose: to lure wealthy students, the ones who need the money least. And these institutions are drawing the merit aid from their limited financial aid budgets, leaving less money for students who need it most.
Two recent analyses — from the Brookings Institution and the organization I lead, the National Association for College Admission Counseling — show that in the past 20 years this trend has accelerated, while need-based financial aid has dwindled. Money that could be used to expand educational opportunity is increasingly being used to further entrench financial privilege.
As a former dean of admissions, I know this strategy well. For years, I awarded millions of dollars to wealthy students. I didn’t do it because I cared less about low- and middle-income students, but because of the brutal math of modern higher education in the United States.
Consider two students applying to a college that costs $80,000 a year. One comes from a high-income family and receives a $20,000 merit scholarship. If the student enrolls, the institution nets $60,000. The other student is from a low-income family and needs $70,000 in aid to enroll, leaving the institution with only $10,000 in revenue. Which student do you think I incentivized?
As crazy as that might seem, merit aid is just a symptom of a bigger problem: While other nations are investing aggressively in higher education, the United States starves it. Our colleges and universities, long recognized as a hallmark of our excellence, have been steadily defunded over recent decades.
The Pell Grant — our nation’s best tool for supporting low-income college-bound students — is facing an $11.5 billion shortfall. Federal and state funding has been gutted. Millions of research dollars that once flowed into institutions have been slashed, as have loans for graduate school tuition. Colleges are facing a shrinking pipeline of high school seniors, and shifting federal policies are making it more difficult to enroll international students.
This July, the Department of Homeland Security announced that international students can study in America for only four years. That will make it harder for U.S. colleges to attract them — a loss for many reasons, including the fact that international students typically pay full fare to study here. That revenue has helped keep our institutions afloat and subsidized the cost for American students.
Now many colleges are scrambling to keep the lights on. Using merit aid to attract students who can pay at least a significant part of the sticker price is one way these colleges live to teach another year.
To be clear, colleges have not been innocent bystanders in their decline. With the cost of attendance at some institutions now approaching or even surpassing $100,000 a year, it’s no surprise Americans have lost trust in higher education. Raising prices and using opaque discounting strategies won’t bring students in the door. To survive, American higher education must demonstrate it is willing to reinvent itself, not simply defend the same broken system.
We should all want it to succeed. Higher education is one of the most powerful engines of economic mobility. Research shows that 10 years after enrollment, students who attended college generated an estimated $73.4 billion in additional annual earnings compared with high school graduates. The fewer people we educate, the fewer workers we have in high-paying sectors — a risk we cannot afford as we face a declining birthrate that threatens labor shortages. High wages lead to more tax revenue.
So this should be a priority for voters and lawmakers. It should also be a priority for the millions of Americans who once relied on financial aid to attend college. Far too many — more and more each year — turn away when their alma maters ask them to help the next generation. Donations alone won’t solve the problem, but if higher education opened doors for you, stop looking the other way. Pay it forward.
Back in my admissions director days, when people objected to the use of merit aid, I often responded with a simple truth: We need the money. It was unavoidable. Yet that didn’t make it right. Bidding wars for wealthy students are inherently distasteful. In a healthier system, they would be unnecessary — or even illegal.
If we are to find a way out of this cynical calculus, America has to make a choice. We can continue starving higher education and accept a future where opportunity belongs to those who can afford it. Or, we can recommit to public investment and philanthropy, to building institutions that are within reach for the average American, and to the belief that it’s talent and tenacity, not family income, that should lead young people to opportunity.
Angel B. Pérez is the chief executive of the National Association for College Admission Counseling. He is the author of “The Hottest Seat on Campus: A Roadmap for Mastering Leadership in College Admission.”
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