A multibillion-dollar industry has sprung up to help schools figure out how much to give each student.
“It’s become much more data-driven,” said James Day, vice president and managing director of financial aid optimization services at EAB Global Inc., a consulting firm in Washington, D.C. that works with more than 1,200 schools, including about 140 on financial-aid strategy.
Using econometric modeling, EAB knows that a $23,000 discount on a $50,000 sticker price has a 24% chance of luring a young woman with middle-of-the-road grades to a nearby private college in the Midwest. Bumping the scholarship up to $28,000 yields a 47% likelihood.
The approach can be controversial, especially at schools that don’t meet the full demonstrated financial need for poorer students.
“What we’ve seen is almost a closing of the doors for low-income students” while schools try to entice wealthier families, said Stephen Burd, a senior policy analyst at the New America Foundation who has studied the merit-aid wars.
Sam Hall, a senior at Chugiak High School near Anchorage, Alaska, was accepted to 10 liberal-arts colleges. An Eagle Scout and a strong student, he figured he might get a few merit scholarships. But not like this.