UVa Feels Pressure to Become More Active in Merit Aid Arms Race

As public universities deal with decreasing state funding and growing competition, particularly for out-of-state students, they are increasingly adopting the enrollment management practices of their private college counterparts – to the detriment of low-income students.

The University of Virginia has not gone down that road – at least not yet.  But as reported in Inside Higher Ed (IHE), the university has had internal discussions in recent years about becoming a more active player in the merit aid arms race.

IHE cited an August 2012 presentation that Greg Roberts, UVa’s dean of admissions, delivered to the university’s board, in which he called for changes to the school’s admissions and financial aid policies “that will enhance our ability to recruit, evaluate, and enroll top students in a rapidly changing and highly competitive marketplace.”

"We will risk losing top scholars unless we begin to rethink the relationship between admission and financial aid at UVa," the university's admissions dean wrote.

It’s unclear how the board reacted to Roberts’ recommendations. Nevertheless his presentation provides a window on the pressures that at least the most competitive public universities feel they are under to use their own financial aid strategically so they can reel in the top (and often “full pay”) students.

As described by Roberts, when it comes to admitting students and offering them financial aid, UVa mostly follows a “traditional model.” Under this model, there is only “limited interaction” between the offices of admissions and financial aid. “Individual application decisions on admission and need-based financial aid are made independently of one another,” he wrote.

The university is need-blind in admissions, meaning that it admits students regardless of their families’ finances, and meets the full financial need of all its students. The university is able to pursue these policies because it is very wealthy and enrolls an extremely small share of low-income students as compared to its public university peers.

So far, this system has worked out pretty well for UVa:

This traditional model has proven to be highly successful over time. We have experienced record application growth for the past five years, with first-year applications exceeding 28,200 in 2012 – a 52% increase over five years ago. By all statistical measures we are enrolling a stronger class of students each year, and the acceptance rate continues to decline, reaching a record low of 29 percent this year.

Despite its success, the university’s approach has become “antiquated,” at a time when the “admissions landscape is rapidly changing,” Roberts says. Colleges are increasingly engaged in a no-holds-barred battle for top students, as well as wealthy ones. Many have embraced enrollment management and financial aid leveraging – using their institutional aid dollars to attract the “best and brightest,” as well as those who can pay full freight, rather than to meet the financial need of low- and moderate-income students:

Vice Presidents of Enrollment, multimillion-dollar operating budgets, and the use of high-priced consultants hired to develop admissions-marketing campaigns and communication strategies have become the norm. It’s now common for colleges to establish admission and aid policies designed exclusively to improve selectivity and yield, two statistics that influence prestige, institutional position, and rank.

The widespread adoption of these practices poses a significant threat to UVa, Roberts wrote. Already the university has seen its “yield rate” – the proportion of students who enroll in college after being admitted – “gradually decline in some demographic groups” in recent years. “Nationally, peers are pursuing admission and aid policies that target our best applicants,” he warned, adding, “We will risk losing top scholars unless we begin to rethink the relationship between admission and financial aid at UVa.”

He proposes adopting at least a “modified version of the Enrollment Management model” in which the admissions, financial aid, and institutional research offices work more closely together to develop “the most strategic and institutionally advantageous admission policies.”

Expanding UVa’s merit-aid offerings would be a key part of this effort. Currently, the university itself offers “very few merit-based scholarships.” However, the Jefferson Scholars Foundation, a non-profit organization that is affiliated with the school’s alumni association, offers scholarships to 25 to 30 prospective students a year that cover the full cost of attendance at the institution over their college careers. Eligible high schools from Virginia and out of state can nominate up to two seniors a year, and the foundation chooses among them. In 2012-13, 1,400 students were nominated for this award.

“The Jefferson scholarship has been highly successful because it lures students who might not otherwise consider UVa to apply,” Roberts wrote. “Because of the Jefferson, we regularly win students who might otherwise be bound for the Harvard’s and Princeton’s and Stanford’s and Yale’s of the world.”

Still, he said, that effort may no longer be enough. The university should consider offering full-tuition or half-tuition scholarships “to a small number of our best applicants.” Alternatively, UVa could offer smaller scholarships – of $2,500 to $5,000 – to the hundreds of students who are admitted each year into the university’s honors program. Another possibility would be to offer aid to the best applicant “from each high school in lower enrollment areas” of Virginia.

Roberts recognizes that moving in this direction would be controversial both on campus and beyond. “If we reduce need-based aid and offer additional merit aid, however, we could open ourselves up to criticism,” he wrote. “We could be seen as backing off on our commitment to socioeconomic diversity.”

At a time when the university is coming under fire for ending its much-heralded “no loans” policy for low-income students, the institution may be gun-shy about taking up Roberts’ recommendations. [And in fact, UVa announced this week that an alumnus/board member has made a $4 million dollar matching grant to the university to create a new scholarship program for incoming students who demonstrate “exceptional promise and significant financial need.”]

Nonetheless, Roberts’ memo to the board shows that private colleges are not the only ones preoccupied with “prestige, institutional position, and rank.” As I’ve written before, many public university leaders are also driven to move up the pecking order (or at least maintain their position), and they have found that the most expedient way to achieve this goal is to throw money at top students.

As more public universities engage in the merit-aid arms race, others feel compelled to follow. This can’t be good news for low- and moderate-income students."