Schools are using more of their institutional aid money on merit scholarships, rather than need-based scholarships. (Kyle Baker/Flickr CC) 

Schools give two types of scholarships: need-based scholarships that go to the lowest-income students, and merit scholarships that go to the smartest students. 

A report from the New America Foundation finds schools are increasingly using their money on merit scholarships. Steven Burd authored the report, and he says this trend means more money is going to those who need it the least.  

CARAPEZZA: The results of your report show that colleges and universities are shifting more towards merit aid. Why is that?

BURD: Two reasons. One to get the best and brightest students so they can rise up the rankings and two they are going after the wealthiest so they can increase their revenue.

CARAPEZZA: You single out Northeastern, and you say that it's giving more of its financial aid to affluent families. What are Northeastern and other universities getting wrong?

BURD: Northeastern is an institution that has been singularly focused for the past couple decades on rising up the U.S. News rankings. And as part of that effort the school has used its institutional aid dollars to aggressively pursue high achieving students and a more upscale student body. Their generous merit aid policies have left some students out in the cold, namely low-income students.

CARAPEZZA: You say Northeastern and other schools are trying to get as many applicants as possible so that they can reject more students and seem more prestigious.

BURD: Northeastern sends nearly 200,000 personalized letters to high school students each year. The institution then follows up the letter with emails making it seem like the school is wooing these individuals. For schools like Northeastern it boosts the number of students who apply who can be rejected.

CARAPEZZA: We reached out to Northeastern. The admissions office pointed out that it's strongly committed to maximizing access and affordability for all of its students. 

See Northeastern's response here. (954.3 KB)

BURD: Well it's interesting because the data I'm looking at is a couple years old. So, Northeastern says that they're changing their policies so they'll be able to meet the full need of their freshmen students. It will be interesting over time to see how that affects the numbers that I look at.

CARAPEZZA: On the other end of the spectrum your report highlights schools like Amherst College here in Massachusetts. What are these schools getting right?

BURD: The former president there, Anthony Marx, made it his personal mission to make what is one of the most exclusive private colleges in the country one of the most socio-economically diverse.So they launched an aggressive effort to recruit at high schools in low-income neighborhoods. They forged partnerships with community colleges to identify students who could succeed at Amherst. They actually give low-income students a leg up in admissions when evaluating candidates with similar SAT scores.

CARAPEZZA: When you pick and choose the schools that you highlight, isn't it easy to pick the schools that have a lot of money, prestige, and a big alumni base already. Won't those schools always do a better job of increasing access and affordability for poor students?

BURD: Money of course does matter, and I acknowledge that obviously. But there are plenty of wealthy schools that don't come close to matching Amherst's efforts. In many cases I think it's a question of leadership at the schools.

CARAPEZZA: Your report looks specifically at merit aid. You have kids that aren't of college age yet, but they will be. If they do well at school -- don't you want them to be rewarded?

BURD: My wife would say we may need this someday. But merit aid is not primarily a middle class benefit. Much of the aid is actually going to families who are many times wealthier. Federal data shows that families making more than $250,000 are more likely to receive merit aid than those making less than half that. But ultimately for me this is a question of who needs the help the most. For many who receive merit aid, the question is not whether the student is going to college -- but where. For low-income students the question is whether they're going to college at all -- whether they'll be able to afford it all. And research has shown that need-based aid really makes the difference in determining whether a low-income student goes to college or not.