There is a wonderful moment in Philip Delves Broughton’s Ahead of the Curve in which he describes a fight between a student and an administrator at Harvard Business School.  During the altercation, the student asks why he is being jerked-around, since, after all, he is “the customer”.  To this, the administrator calmly replies: “no you’re not, you’re the product”.

For serious institutions, this is exactly right.  People judge a school based on its alumni and their accomplishments.  Students are just inputs in the making of alumni.  And since the easiest way to improve your outputs is to improve your inputs, it’s usually worth paying for better raw materials.  So the way to think about undergraduate merit scholarships is as an institutional attempt to purchase better inputs.

Think about it: what would it be worth to new-ish universities (say, MacEwan or Mount Royal) to have one of their students win a Rhodes Scholarship?  What benefit would they get in terms of recruiting and reputation for something like that?  My guess would be easily half a million or so.  So if you were President of one of those schools, and you could somehow forsee which teenagers were most likely to become Rhodes scholars, what would you stump up to convince such a student to attend your institution?  $100,000?  $200,000?

That sounds like a ridiculous question because we’re conditioned to think about the size of institutional scholarships as being a function of tuition (or, in the case of truly exceptional scholarships, like McGill’s Greville-Smiths, a function of tuition plus cost of living).  Yet we have no problem thinking about merit awards much larger than tuition at the graduate level; so why are squeamish about it for undergraduate students?

I think one reason is that people see too much waste in the current scholarships.  The number of genuinely outstanding people who could shift an institution’s reputation is pretty small; yet, on average, Canadian institutions pass out entrance awards to nearly two-thirds of their entering students in sums so small one wonders what possible purpose they could be achieving.  Fewer, bigger scholarships – or an outright diversion of money from merit to need – might bring greater results, but people are wary about potentially handing even more money to a system which, at present, achieves very little.

It would be interesting if one Canadian institution broke from the herd and started paying for talent as if it mattered, instead of dropping seven figures a year on masses of one-time $1000 and $1500 scholarships.  Among other things, we might just find out just how many great alumni it takes to shift public perception of an institution.  My guess is it’s fewer than you’d think – which is precisely why this is worth a try.