September 6, 2011
Every so often, the issue of financial aid awarded on the basis of students' race flares. Lawsuits crop up challenging a state's or institution's ability to consider students' race in handing out grants, or a white student (or a group of such students) announces the creation of a fund for scholarships reserved for white students, on the grounds that grant money flows disproportionately to members of minority groups.
A new report challenges the assumptions underlying such developments. The study, by the financial aid analyst Mark Kantrowitz, is plain about its goal: to debunk what the author calls "the race myth, which claims that minority students receive more than their fair share of scholarships."
Kantrowitz is no minority activist; as the publisher of Finaid.org, and an ABD in computer science from Carnegie Mellon University, he is first and foremost a financial aid data enthusiast, known for crunching numbers to help students and families, policy makers and others understand the complex world of financial aid.
Numbers present a compelling and clear argument in this case, Kantrowitz asserts in his paper. Mining data from the U.S. Education Department's National Postsecondary Student Aid Study, Kantrowitz examines the flow of federal, state, institutional and privately funded financial aid to students of different races.
Looking at all of those forms of financial aid together (excepting only federal tax benefits), Kantrowitz finds that the money flows to students of different races roughly in proportion to their representation in the overall postsecondary population: white students make up roughly three-fifths (61.8 percent) of all students, and they receive about that amount of all total grant funding (59.3 percent). Various minority groups also receive proportions of grant funding that track their representation among all students (Hispanic students make up 14.1 percent of students and receive that proportion of grant aid, etc.). That's more or less as it should be, Kantrowitz says.
The big differences come when examining breakdowns of different kinds of financial aid -- funds awarded to students based purely on their financial need vs. those awarded without regard to such need, scholarships awarded by institutions and by private organizations, etc.
Among all sources of grant funding (federal, state, institutional, private, etc.), white students (who make up 61.8 percent of all students) receive 51.3 percent of grant aid awarded based on financial need alone, while minority students receive 48.5 percent. That breakdown occurs, Kantrowitz says, for an obvious reason related to the relative financial stations of minority and white Americans in U.S. society: "Minority students receive a higher share of need-based grants, representing 48.5 percent of grant recipients and only 38.0 percent of the student population, [because] they are more likely to be low-income."
White students, in turn, receive 75.6 percent of grants awarded based on academic and other kinds of merit, compared to 24.3 percent allocated to minority students. These grants, Kantrowitz notes, are often awarded by semi-selective colleges as a "form of financial aid leveraging," to woo middle- and upper-income students who can pay meaningful portions of their tuition costs. "A full-pay student -- even with a significant discount in the form of a merit-based grant -- still yields more net revenue to the college than low or moderate-income students," he writes.
Focusing on institutional grants alone -- the funds that individual colleges and universities choose how to distribute -- white students receive 69.1 percent of all funds, but 75.9 percent of merit-based grants, and 60.7 percent of need-based grants. "Caucasian students are almost twice as likely to receive institutional merit-based grants as minority students" are, Kantrowitz writes. The figures hold for minority students of all kinds, as seen in the table below:
Allocation of Institutional Merit-Based Grants, 2008-9
| Race | Average Grant Received | Number of Grant Recipients | Percentage of Grant Recipients | Percentage of Total Grant Funding | Percentage of Student Population |
| White | $5,375 | 1,383,900 | 75.5% | 75.9% | 61.8% |
| All Minority Students | $5,259 | 447,300 | 24.4% | 24.0% | 38.0% |
| Black/African-American | $5,238 | 171,100 | 9.3% | 9.1% | 14.0% |
| Hispanic/Latino | $4,839 | 141,800 | 7.7% | 7.0% | 14.1% |
| Asian | $6,543 | 72,100 | 3.9% | 4.8% | 5.9% |
| American Indian/Alaska Native | $3,909 | 12,300 | 0.7% | 0.5% | 0.8% |
| Native Hawaiian/Pacific Islander | $4,587 | 6,800 | 0.4% | 0.3% | 0.7% |
| More Than One Race | $5,066 | 43,200 | 2.4% | 2.2% | 2.4% |
| Total | $5,347 | 1,833,100 | 100.0% | 100.0% | 100.0% |
Source: Mark Kantrowitz
At public colleges, white students made up 62.7 percent of the student population but were 73.1 percent of the recipients of merit-based grants and received 68.2 percent of the merit-based funds; at private nonprofit colleges, white students made up 66.8 percent of the collective student bodies but received nearly 80 percent of the merit-based grants. Over all, white students were nearly twice as likely as minority students with SAT scores of at least 1400 (on a 1600 scale) to receive institutional merit-based scholarships, Kantrowitz says.
Figures like those explain why state and institutional merit-based financial aid has increasingly come under attack from groups that advocate for low-income and minority students (like Education Trust) and why some campus leaders have argued that institutions should move to once again allocate their precious aid dollars based on students' financial need rather than other factors. Minority students receive 34.7 percent of all privately funded scholarship money, and make up 30.5 percent of recipients of privately funded scholarships, Kantrowitz reports.
"To put minority students on an equal footing would require increasing annual private scholarship awards for African-American students by $83 million and Latino students by $197 million," he writes. "These figures are based on equalizing the mean grant, the ratio of total funding to total student enrollment, so that all racial groups have the same mean grant."
Kantrowitz concludes: "Over all, merit-based grants tend to disproportionately select for Caucasian students. This is compensated somewhat by the distribution of need-based grants according to race, since minority students tend to be less affluent than Caucasian students. Shifting funding from merit-based grants to need-based grants will yield more balance in the distribution of grants according to race, but it will not entirely compensate for private scholarships that collectively demonstrate implicit preferences for Caucasian students."
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