Jim Chen at  MoneyLaw has a series of posts,  here and here, discussing how changes in the availability and use of financial aid have manipulated the landscape for poor students to attend the nation’s most prestigious universities.

One of the things that we can look at is how colleges and universities use their own financial resources either to broaden access or to serve other purposes. And what we’ve seen is a huge shift away from providing institutional financial aid to the financially neediest students and more towards giving larger financial rewards to students who could afford to go to college whether they got a financial award or not. But these public universities, in order to move up in the ratings and the rankings systems, are actually buying up students who have done better previously.

Schools are using financial aid, in the guise of merit scholarships, to buy perceived talent.  Where once we thought that financial aid was there to help the needy student who would be shut out of college because his family lacked the resources to pay the tab, the scenario has changed.  In order to play the U.S. News and World Reports ranking game, this money is used to entice students that the school wants and needs to up its numbers.

Luke Gilman’s assessment of this trend is extremely perceptive. I quote him in full:

There is a clear incentive to “buy” high performing students in order to increase the illusion of selectivity. This incentive in turn puts pressure on admissions offices to make choices based on numbers that it might otherwise make on less quantifiable grounds and also applies pressure to increase tuition to fund the arms race. In this context, the recent moves by wealthier universities to reach into their endowments looks less like philanthropy and more like the erection of barriers to entry.

When the rankings start to reflect not the value the institution can impart on a student by virtue of its education but rather the status the school can achieve by leveraging its endowment to pad its LSAT stats, then it’s time for a MoneyLaw revolution.

Having a daughter in her senior year of high school on her way to college, I’ve stared this beast in the eyes personally. In fact, during the myriad of lectures one sits through during campus visits, the admissions people have been fairly straight forward about it.  If they really want you child, they will pay for him or her. 

Admissions was once about whether your kid had the intelligence and drive to successfully complete the program.  Later, it was about whether you could pay the freight, so the school could use its cash on the needy while others shouldered the financial burden on their own.  But as Jim and Luke make clear, those days are gone.

Today, it’s a bidding war for the kid with good numbers, the one who will help the school to up its ranking.  If a lesser school can buy the kid, then it won’t be a lesser school for long.  This is the skewed nature of the rankings, based not upon their output but their input.  If smart kids with high scores go there, it must be good.

In the second part of the series, Jim notes that the benefit of the Ivy League education diminishes with the amount of effort the student puts in.  While those who didn’t go Ivy think that it’s a free pass to success, Jim accurately notes that a kid in the middle (or bottom) at an Ivy is viewed as an also-ran by potential employers and graduate schools.  It’s not a substitute for academic achievement, despite common belief to the contrary. 

The central finding of the Dale-Krueger study is that the academic prestige of the college attended by a student, generally speaking, has no bearing on future earnings. Greater selectivity in the admissions office simply sinks a student, ceteris paribus, deeper in the class by graduation. Employers are not wholly irrational: they discount class rank by the academic reputation of a job applicant’s alma mater, and they discount the reputation of an alma mater by the applicant’s class rank. And just as smart, motivated students can find suitable study partners at a less selective school, lazy students at an elite school can find plenty of counterparts with whom to loaf.

So this tends to show that the smart, motivated student who excels will achieve greater success at a lesser school than the lazy wealthy kid at the elite school.   So an Ivy diploma alone is no guarantee.

I’m troubled, however, by basing the definition of “success” on future earnings rather than the quality of education.  One thing that remains true is that the depth of education depends upon the level of thinking and discussion developed during classes, and that depends on the intelligence and thoughtfulness of the other kids in the room, as well as other factors.  Future earnings, on the other hand, don’t necessarily depend upon brilliance, which is often more of an inhibiting factor in a future career than an aid.

Jim goes on to note that:

Of course, to the extent elite education does make a difference, there is one class that appears to benefit most: “students from more disadvantaged family backgrounds.” Poor students seem to benefit because elite schools give them connections they would otherwise never acquire. These are the very students being iced out of elite universities by emerging trends in admissions and financial aid.

Ironic, isn’t it?  This trend is not only a danger to the fabric of higher education, particularly in light of the efforts over the past 50 years to provide opportunity for the disadvantaged, but it reflects how one magazine’s list, one ranking, has so badly screwed up the model for American education.  You’ve got to give U.S. News and World Reports credit.  Our institutions of higher education may hate the rankings, but they still play the game.