When George Washington University unveiled its freshman class this fall, there were 25 National Merit Scholars -- students considered to be among the best and brightest, and most sought after by colleges and universities. It was a pretty good showing for GW, which enrolled 2,100 freshmen this year, and one made possible in part by the $15,000 annual award GW promised to each Merit Scholar -- regardless of whether he or she needed the money.
"I don't know if we would attract the same number without the scholarships," says Michael J. O'Leary, senior associate admissions director for GW. "But I wouldn't be comfortable experimenting by dropping them. I know what we're doing right now works."
And it works not just for GW. Schools across the country are offering scholarships based on merit to entice highly desirable students who, without the extra inducement, might choose someplace else. While the nation's most prestigious colleges and universities are swamped these days with applications from valedictorians, class presidents and straight-A students, and therefore can reserve their money only for those who truly need tuition help, the vast majority of schools are like GW, hoping to win over as many cream-of-the-crop high school graduates as they can. And for good reason: The better a school's student profile -- with higher SAT scores and more honors -- the easier it can be in the future to attract students, faculty and alumni donations. So alongside need-based scholarships these schools are now offering some substantial golden lures.
Just ask Britt Harter. A 1999 Sidwell Friends School graduate, Harter had stellar grades and SAT scores, was captain of the baseball and basketball teams and editor of the literary magazine. Harvard and Yale both wanted him. But the University of Chicago decided to make a big play for him, too -- and offered him free tuition for four years, worth about $100,000. "I thought, `Wow, that's a lot of money,' " Harter recalls. Although Chicago was not originally one of his top choices, the offer made it a contender. In the end, he chose Yale, but not before giving Chicago serious consideration.
With the annual price tag at many private colleges now more than $30,000, it's no surprise that there's a growing backlash against paying full sticker price. "We stuck it to the consumer and jacked up the price of going to school," says Jeff Zellers, enrollment dean at Ohio's Muskingum College. "Now, we're playing all these games on the discounting side."
"Like April in a used-car lot," is how Stephen R. Lewis Jr., president of Carleton College in Minnesota, describes the feverish bargaining that occurs over top students. Small, private colleges like Carleton are caught in a bind in this competition. Without large endowments, they can't afford to jump wholesale into bidding wars for students. They're also feeling the heat from state universities, which not only have the advantage of lower tuition, but also can entice prospects with merit scholarships.
Making things even more competitive is the fact that many of the Ivy League schools and several dozen other selective, private colleges such as Amherst, Bates, Swarthmore and Massachusetts Institute of Technology have tinkered with aid formulas in the last two years to create better awards for students, generally resulting in fewer loans and more grants. Those colleges, which continue to tie scholarship money exclusively to need, say they weren't responding to pressure from other campuses. But Bates Vice President Bill Hiss acknowledges, "We can sure smell the competition."
According to guidance counselors at local public and private schools, top students are going after the financial bait dangled by such institutions as Emory University, the University of Rochester and the University of Maryland, which has bolstered its reputation in recent years by luring high achievers, in part with merit-based scholarships. At Maryland about a quarter of each class is getting merit-based awards, which run from about $1,500 annually to a full ride.
The dance to get the best students often doesn't end with a simple offer. "There are more negotiations on both sides for the most qualified and interesting applicants," says Nina W. Marks, college guidance director at the National Cathedral School in Northwest. Savvy families have gotten the message that money is available, and every April, when acceptance letters are mailed out, prospective students and their parents begin calling colleges seeking better financial aid packages or more scholarship money.
Some schools encourage students to send in competing financial aid or scholarship offers -- even schools that award only need-based aid. While many admissions officers say they solicit the information merely to make sure they haven't misinterpreted a family's financial resources -- there can be large variation even in need-based packages -- others make it clear they'll match or beat a student's best offer.
Carnegie Mellon University in Pittsburgh is one of those schools that encourage accepted students to send in competing offers. University officials then evaluate such factors as how desirable the student is, how Carnegie Mellon stacks up against other colleges being considered and how likely the student is to enroll anyway -- and then decide whether to counter the offer. "There's a food chain in this business, and some schools are going to want some students more than I want them," says Bill Elliott, Carnegie Mellon's vice president for enrollment. The result? Last year, more than half the 800 or so students who sent offers from other schools got a counteroffer from Carnegie Mellon of up to $5,000 more money -- and more than half of those students ended up enrolling. For Carnegie Mellon that's an above-average "yield."
Says Elliott, "It's good old market pressure. You can't do what you did 10 years ago in any business and survive successfully."
Some people aren't happy about the idea that higher education be run like just another competitive business when it comes to doling out financial aid, and worry that over time it will wear away the time-honored principle of making sure that all qualified students who want to attend college are given the money to help them do so.
"We're not responding to the Let's-Make-a-Deal environment," says Charles Deacon, dean of undergraduate admissions at Georgetown University, which offers only need-based aid. Of course, Georgetown doesn't have to woo students with money -- with 13,232 applicants for this fall's freshman class of 1,475, the university rejected half the high school valedictorians who applied.
"Bribing kids to go from school A to school B doesn't seem a good use of money," says David W. Breneman, dean of the University of Virginia's Curry School of Education. "All the money spent diverting high-income kids is coming out of something, and it may knock needy kids out of higher education, or into second-tier state universities or community colleges."
At Virginia, hundreds of non-need scholarships are awarded annually to attract top-flight students and athletes. But with 12,474 undergraduates "our primary goal for the vast number of students is meeting need," says U-Va. Dean of Admissions John Blackburn. "I don't think we're on a slippery slope."
Still, nationwide in the last decade or so there has been a sizable increase in the amount of money going into merit scholarships. According to Kenneth Redd, senior researcher at Sallie Mae, the nation's leading provider of student loans, colleges spent $888 million in 1989-1990 for undergraduate scholarships not based on need; in 1995-1996 that amount had jumped to $1.8 billion. Concurrently, need-based scholarships by institutions went from $1.8 billion in 1989-1990 to $4.7 billion in 1995-1996. The largest provider of college aid is the federal government, which in 1997-1998 supplied $44 billion to students, including through scholarships and loan guarantees. The share of federal funding given to needy students has dropped from 86 percent in 1985-1986 to 61 percent in 1997-1998, according to Tom Mortenson of the Center for the Study of Opportunity in Higher Education.
Still, as Britt Harter's experience shows, it's far from clear how significant money incentives are and will become. No one, for instance, expects students to start leaving the Ivies in droves for better financial deals elsewhere. But for colleges below that top tier, the situation can be quite different.
Katie Shilton, who graduated last spring from T.C. Williams High School in Alexandria, had her heart set for years on attending Swarthmore. But when her acceptance letters arrived, Oberlin College dangled a $10,000 annual scholarship in front of her -- and a free pint of Ben & Jerry's ice cream (Jerry is an Oberlin grad). The offer, she decided, was too good to pass up. "It's neat to know they really want you -- it's very, very flattering." She hasn't looked back.
Debbie Goldberg writes frequently about education.