If you look around the world at the kinds of subsidies made available to students, you’ll be struck by the fact that there are two very large chunks of the world where need-based aid isn’t the dominant form: post-Socialist Europe and Africa. The reasons for this boil down to a simple issue: trust.
In the post-socialist countries, the preference for merit-based aid over need-based aid is a relatively recent affair. Prior to 1990, access to university was restricted both in absolute numbers and on ideological grounds: in order to attend university one had to have correct “origins”. This was another way of saying that if your family was considered too bourgeois, you weren’t allowed to attend (Vaclav Havel, for instance, was denied entrance to university on these grounds). Though regimes eased up on this somewhat as the 70s and 80s progressed, class origins continued to play a role in admissions up to the end of the regime.
So when it came time for new, post-socialist regimes to come up with student aid policies, there was considerable suspicion about anything that looked like it discriminated based on something like class. Preferences based on parental characteristics, quite simply, were too tainted by communism to be a viable political project: nobody trusted government to discriminate between students based on something like income. Merit-based aid, on the other hand, was not so burdened by history, and gave the appearance of being “objective” in the sense that exam results were measured in a consistent way across the country, and could easily be used to differentiate between students. The results, in a word, were trustworthy.
In Africa, the trust problem is slightly more complex, and less tractable. There, the state lacks the ability to monitor individuals’ income and consumption through the tax system. Trying to run a need-based system of aid without means of income verification is difficult, to say the least (in bits of Eastern Europe – especially Russia – income verification poses the opposite problem in that people are reticent about providing documentation that would help the government verify income). Without income verification, need-based systems tend to rely on proxies like ownership of land or livestock, which is either very complicated or impossible to verify. These systems quickly fall into disrepute: because it is possible to cheat them, everyone comes to assume that those who receive need-based aid have cheated. And so again, something simple and transparent – like merit as measured through examination results – becomes the de facto standard. Everybody knows it’s ludicrously regressive, because the awards inevitably go to students from families rich enough to pay many multiples of university tuition to attend the best secondary schools, but at least it’s transparent and not corrupt.
Japan has a similar issue: it has no need-based grants, because no one trusts that the tax system accurately captures parental income. It does, however, have a need-based loan system. When I asked someone senior there about why they trusted need-testing for one and not the other, he simply said “because people pay back the loans”.
All of which is to say that need-based aid requires that students and families trust that state institutions will deal with them fairly, and state institutions need to trust that families won’t try to lie to them (or, at least, have reasonably robust measures of discovering lies). In Canada, we take this for granted, but we shouldn’t. Without trust, and the transparency that tax-based verification tools provide, need-based aid simply wouldn’t exist.