Experts claim colleges are spending more to attract wealthy students by offering merit-based scholarships. And it's making it harder for people who need financial help to attend college.

According to a 2019 study on non-federal aid by the National Center for Education Statistics, students in the highest 25% income range got more money than students in any other income category, including the lowest 25% income range. Learn why well-off students receive more financial help and how low-income students may make the most of their opportunities.

Universities Are Looking For Affluent Applicants

Some analysts believe that wealthy students receive more financial help from universities than those with demonstrated financial need. Several universities offer financial aid that is not based on students' needs in an effort to recruit affluent, often academically gifted, students.

Still, there needs to be an incentive structure for assisting students from low-income backgrounds. Colleges seek students who will improve their rankings, and wealthy students generally meet the description.

For instance, the yearly rankings published by U.S. News & World Report are primarily based on performance criteria such as substantial academic achievement and SAT scores. The Brookings Institution found that wealthier kids had a more significant advantage on the SAT.

Schools Compete

Private and public institutions are adopting a "high tuition, high assistance" strategy to differentiate themselves from one another, according to Stephen Burd, senior writer and editor of higher education at New America, a nonprofit, nonpartisan think tank.

As a result, "it makes life more and more expensive for the individuals who don't get money, leaving them with more unmet need," as Burd puts it.

Public universities are increasingly joining the commercial sector in charging exorbitant tuition rates to compete for out-of-state students. He continues, "It is destabilizing public higher education and the reason we have a public higher education system in the first place."

Limited Financial Aid Budgets

Financial aid such as scholarships and grants account for around one-third of total college expenses for most families, as reported in Sallie Mae's latest "How America Pays for College" study. However, there is a certain amount of money in a university's financial assistance budget.

Thus the institution must prioritize how it distributes its resources. A 2020 New America analysis that looks at financial help at 339 different institutions found that between 2014 and 2017, non-need aid, often known as merit aid, increased by 37%, while need-based aid increased by just 21.

During this time, these institutions' non-need aid climbed from $2.2 billion to approximately $3 billion. Robert Kelchen, an assistant professor of higher education at Seton Hall University in South Orange, New Jersey, contends that some universities are striving to provide as much as possible to students, especially those receiving Pell Grants.

Increasing College Aid

Low-income students may still make the most of available financial help despite the need for a systemic shift in how universities provide need-based aid. So, let me show you.

• To maximize your chances of receiving financial assistance, fill out the FAFSA as close to the beginning of the semester as you can. Also, if your chosen university requires it, fill out the CSS Profile.
• Don't turn down help like the Pell Grant or work-study.
• Check into need-based financial aid options. The Scholarships Search Tool is a resource the U.S. Department of Labor provides.
• Borrow no more than 10% of your expected monthly income after taxes in your first year out of school if you require a loan. Get your hands on as many federally subsidized student loans as possible.
• If you have experienced a change in your financial circumstances since submitting your FAFSA, consider appealing to your chosen institution for further financial help.

Motives Rich Students Should Seek Out Scholarships

Now that the college application process is over, many households are considering how they will pay for their student's education.

The question "Do I need to complete a FASFA if I'm not going to qualify for financial assistance?" appears in various forms every year around this time on College Coach's financial aid hotline.

The quick response to the query is "no." No student is compelled to fill out the Free Application for Federal Student Assistance or any financial aid application. The college of your choice will gladly accept your child even if you cannot afford to pay for it.