Giving Rich Kids a College Advantage

The New York Times published a front-page article recently which discussed how some colleges are giving preferential treatment to rich students.  The trend shouldn’t be surprising. Actually, the vast majority of private colleges have been playing out of this rule book for many years. It didn’t take the current financial crisis to trigger it.

Regardless of how you feel about the practice, wealthy students help a school’s bottom line by paying full price or closer to full fare, which can then allow a college to give more aid to less fortunate kids.

In reality, most private schools have to offer some sort of bribe to attract wealthy students. What I’m talking about is a merit scholarship, which is also referred to in the industry as tuition discounts or non-need-based aid.

Schools perched below the Ivy sphere have to provide college scholarships because affluent kids with attractive academic profiles enjoy plenty of choices. Let’s look, for example, at how a good school like George Washington University competes with a higher ranked institution like Georgetown. George Washington’s average yearly tuition discount is $19,000+.

In contrast, wealthy kids who get into Georgetown will receive this discount:  $0. That’s right nothing. Georgetown refuses to cut the price for its wealthy students.

Ultimately, families have to ask this sort of question:  Should I capture close to a $100,000 university scholarship from GWU over four years or get nothing from a school like Georgetown.

Unfortunately, many families are unaware of the discounting taking place at so many schools. Parents can figure out what’s going on if they know how to pinpoint the college scholarships (or lack of them) at individual schools.

Of course, middle-class and lower income families have an even bigger incentive to pinpoint schools whose policies are more supportive of their financial need.

These are subjects that I’ve covered in my college blog before (check the archives under merit awards and financial aid) and I write about them extensively in my book, The College Solution.

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2 Responses to Giving Rich Kids a College Advantage

  1. Korie October 20, 2009 at 7:42 pm #

    College is insanely expensive now. I’m a single mom; there aren’t a whole lot of jobs that allow me to take care of myself, my son, and go back to school. I don’t think discounts for the wealthy is something I’ll have to consider for my son?
    So how in the world am I supposed to save enough for my son to go to college debt-free in 15 years (and hopefully set Mama up for a nice retirement 😉 I’ve figured out a few tricks…thanks for the article Lynn, I’ll be back for ideas.

    So far, I’ve started a 529 College Savings Fund. There are TONs of funds out there, many not so good. I live in Ohio, so I went to http://www.collegeadvantage.com/index.aspx. I put $30 in 4/23/09, got a FREE referral $25 bonus for signing up with a friend’s referral number (mine is 2478182 if you want to get $25), and since then my $30 has turned in $69.61 as of today 10/20/09!

    I’m feeling better about saving for college already! I haven’t put a penny in since April and I’ve earned 232% from bonuses.

  2. Kris Hintz April 3, 2009 at 5:02 pm #

    Thank you! I am a career coach at Position U 4 College, helping students and young adults optimally position themselves for college, graduate school or the workforce. I enthusiastically recommend your book to my clients as well as on my blog http://www.positionu4college.wordpress.com.

    Your book helped me realize that “positioning oneself” to a college not only includes communicating key academic, athletic, artistic, or diversity attributes a school is looking for. FInancial elements play a key role in positioning strategy as well.

    Based on your book, I recommend clients introduce the financial element into the college search process from the “get-go,” along with the initial classifications of “reach,” “realistic,” and “probable,” based on academic qualifications.

    Your approach was always important, but in today’s economic environment, it is vital!

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