Recession Response
Media Reports

Boston Globe
Economy lifting college prospects of the well-heeled
By Peter Schworm, Globe Staff  |  February 24, 2009

For students applying to college, it's a very good year to have strong grades and deep pockets. Especially the latter.

As colleges and universities provide more financial aid to families hit by the recession, they are also more likely to give wealthier students preference in admissions and scholarships to help offset that extra cost, according to college administrators and consultants.

"The full-pay kid this year is going to be at a premium," said Frank Vellaccio, senior vice president at the College of the Holy Cross in Worcester, which does not consider finances in admissions decisions. "Those students are going to have a lot more choices now and will get into schools that they might not have normally."

To widely varying degrees, colleges consider students' financial means when they assemble incoming classes. But the dismal economy and problems in the credit market have complicated these calculations and renewed questions about economic disparities on campuses.

Outside the wealthiest sliver of colleges, whose so called need-blind practices are not expected to change substantially, most institutions are struggling to balance the growing demand for financial aid with their budget constraints. In effect, they need more students who do not need financial aid to subsidize the rising need of those who do.

That puts wealthier students at an advantage at smaller private institutions that rely heavily on tuition income. Not only are they more likely to be accepted, they also stand to receive more scholarships to sweeten the offer.

Colleges with modest endowments, in particular, acknowledge they must base some admission and scholarship decisions on students' ability to pay, especially in the current downturn.

"If students are going to need a huge amount of money, that's not a practical expense for us," said Michele Kosboth, director of student financial planning at Lasell College in Newton, which charges $23,000 in tuition. "We're not going to be able to help them as much as they need."

Morton Schapiro, president of Williams College in Williamstown and an economist who specializes in higher education finance, said there has "never been a better time to be a smart, rich kid. And at some schools, you don't have to be as smart as you did before. That's what happens in a recession."

Schapiro referred not to his own institution, a top-tier private school that meets the full financial need of its students, but to the vast majority of schools that must base admissions decisions - at least in part - on financial means.

He predicted that colleges would find ways to boost tuition revenue. Some will require students to borrow more money and pay more of their summer and work-study earnings, for example, and others will ask parents to contribute more.

More ominous for working- and middle-class students, many colleges will give more weight to families' ability to pay when making admissions decisions, educators say.

"They are going to turn the dial more in that direction," Schapiro said.

That step gives colleges, which have been forced to lay off workers, slash budgets, and delay construction, some badly needed financial flexibility and allows them to protect or expand financial aid.

Richard Doherty, president of the Association of Independent Colleges and Universities in Massachusetts, said that nearly all of the state's private colleges are maintaining or increasing financial aid, allowing some low-income students to pay the same at a private college that they would at a public school.

For example, Suffolk University is expanding a program that forgives loans for students who graduate, and many colleges, including Holy Cross, have created contingency funds to handle more aid requests.

Some, such as Newbury College in Boston, are marketing no-interest payment plans so families don't have to pay the full cost up front, and many are urging alumni to earmark donations toward student aid.

But a good portion of this aid goes to wealthier students who can pay more tuition, specialists say. Better-off students also tend to have higher standardized test scores, and therefore serve the dual purpose of boosting the college's reputation and its finances, critics of the practice say.

A survey by the National Association for College Admission Counseling released this fall found that 43 percent of college financial aid was distributed on factors other than financial need, such as academic achievement, athletic ability, and having a parental tie to the school.

"For every student that needs more financial aid because their parent lost their job, colleges need to admit someone who can pay the full amount," said Jack Maguire, a higher education consultant in Concord.

Colleges are apt to cherry-pick more affluent students off waitlists, Maguire and other specialists say, when they have a better sense of students' financial need vs. their own budgets.

"Colleges will reach the point where they've exhausted their financial aid," Maguire said. "At that point, they are disproportionately going to go with students with little or no need."

Some colleges are strategically offering well-to-do students partial scholarships in the hopes of outbidding the competition.

"We've lost some really top students to elite schools, and we realized we needed to boost merit awards," said Silvio Vazquez, vice president for enrollment at Gordon College, a 1,600-student liberal arts college in Wenham, where tuition is $26,132. "Whether you call it merit or need, it's all institutional aid."

Federal stimulus legislation provides provisions aimed at bringing college costs within reach, including educational tax credits and a hefty expansion of the federal Pell Grant program for low-income students.

Still, the college system hinges on students who can afford full tuition costs. Those payments enable schools to discount costs for lower- and middle-income students by as much as 40 percent, educators say.

At a college like Holy Cross, for example, which charges about $50,000 a year, that would mean a savings of $20,000 for some students on financial aid.

"Without these students, no one goes to college," Vellaccio said. "You need the paying customers."