Scholarship Providers Issue Report Criticizing Financial Aid Practices of Wealthy Colleges

A new report from a group of national scholarship providers criticizes the financial aid practices of a number of wealthy colleges for inadvertently penalizing poor and minority students, Bloomberg.com reports.

To be released later this month, the report from the National Scholarship Providers Association, a Colorado-based group comprising 320 members, including the Bill & Melinda Gates, Michael & Susan Dell, and Walmart foundations, argues that colleges are hurting poor and minority students when they rescind or set limits on financial aid awards after they find out a student has received additional scholarship assistance from a private source or sources. In some cases, the student then has to apply for loans to cover the shortfall — loans that can amount to a significant portion of a family's household income.

Universities following such practices argue that allowing students to use aid from private sources to cover what they are expected to contribute on their own would be unfair to students who do not receive additional aid. "You want to treat everybody as equally as you can," said Tom Parker, dean of admissions and financial aid at Amherst College. "Morally it's a difficult question."

Still, the practice can hamper a student's ability to pay for or even afford college and, as the report's authors explain, "takes away a reward that the student earned through hard work and concentrated effort....There is no net financial gain to a student despite winning a private scholarship, and therefore no additional improvement to his or her ability to pay for college."

Janet Lorin. "Poor Scholars Hit by Money Squeeze From Wealthy Colleges." Bloomberg.com 03/07/2013.