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PEDAR: Executive Summary  Institutional Aid to Full-Time Undergraduates Attending 4-Year Colleges and Universities
Trends in Institutional Aid: 1992-93 to 1999-2000
Academic Merit, Financial Need, and Institutional Grant Aid Among First-Year Students
Students with High Academic Merit
Institutional Grant Aid and Retention at Awarding Institution
One Year Later
Six Years Later
Research Methodology
Full Report (PDF)
Executive Summary (PDF)
 Trends in Institutional Aid: 1992-93 to 1999-2000

Consistent with earlier studies reporting large increases in spending on institutional aid by 4-year colleges and universities (e.g., Cunningham et al. 2001), this study found that the percentage of full-time undergraduates in 4-year colleges and universities who received institutional aid increased over the last decade, both in the public and private not-for-profit sectors.1 In 1992–93, 17 percent of undergraduates in public institutions received institutional aid, averaging about $2,200 (after adjusting for inflation to 1999 dollars). By 1999–2000, 23 percent received such aid, averaging about $2,700. In private not-for-profit institutions, 47 percent received institutional aid, averaging about $5,900 in 1992–93, while 58 percent did so in 1999–2000, averaging about $7,000.

Over the same period, there was a notable increase in the percentage of undergraduates in the highest income quartile who received institutional aid, especially between 1995–96 and 1999–2000. In private not-for-profit institutions, the percentage of undergraduates in the highest income quartile who received institutional aid increased from 41 to 51 percent between 1995–96 and 1999–2000. In public institutions the percentage of high-income students receiving such aid increased from 13 to 18 percent. In contrast, in both the public and private sectors, no corresponding increase was observed during that time for those in the lowest income quartiles; and in private institutions, no increase was observed for middle-income students.

Much of the increase in institutional grant aid awarded between 1995–96 and 1999–2000 was in the form of aid based entirely on merit.2 The percentage of full-time undergraduates who received merit aid increased from 7 to 10 percent in public institutions and from 21 to 29 percent in private not-for-profit institutions. In contrast, between 1992–93 and 1995–96, no differences in the percentages of undergraduates receiving merit aid were observed in either public institutions or private not-for-profit institutions.

A relationship between the likelihood of receiving institutional merit aid and family income could not be detected in public institutions. That is, in all three NPSAS survey years, no differences were observed in the percentages of full-time undergraduates who received institutional merit aid among low-, middle-, or high-income students. In private not-for-profit institutions, on the other hand, differences by income were evident. In both 1992–93 and 1995–96, undergraduates in the middle-income quartiles were more likely than students in either the highest or lowest income quartiles to receive merit aid. By 1999–2000, however, no difference could be detected between the percentages of middle- and high-income students receiving merit aid (roughly 30 percent in each group did so), and students in both these income groups were more likely than low-income students (23 percent) to receive such aid. In other words, in private not-for-profit institutions, in the early to mid-1990s, middle-income students appeared to be favored over both high-income and low-income students in terms of receiving institutional merit aid. Institutions might award institutional aid in such a manner because low-income students are more eligible for need-based aid and high-income students have more discretionary income. However, by 1999–2000, no difference could be detected between those in the middle- and high-income quartiles, and students in both income groups were more likely to receive merit aid than their low-income peers.

Need-based and merit-based institutional aid awards are often packaged together. In private not-for-profit institutions, where merit aid is most likely to be awarded, among full-time undergraduates, 44 percent of those who received need-based aid in 1999–2000 also received merit-based aid; among students who received merit-based aid, about one-third also received need-based aid. Taking into account the various need-within-merit and merit-within-need award strategies that institutions might use to increase institutional aid across income levels, if the trend in increased aid was aimed at all students, the notable increase in merit aid awards to high-income students in private not-for-profit institutions that occurred between 1995–96 and 1999–2000 would have been accompanied by a corresponding increase in total aid to low-income and most middle-income students, who are eligible for need-based aid. However, this does not appear to be the case. Looking at total institutional aid, which includes both need and merit aid, no increase was observed in the percentage of either low- or middle-income students receiving aid between 1995–96 and 1999–2000, while awards to high-income students increased from 41 to 51 percent.

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