A couple of weeks ago, HEQCO released The Impact of Scholarships and Bursaries on Persistence and Academic Success in University, in which Martin Dooley, Abigail Payne, and Leslie Robb examined the effects of university merit scholarships in terms of grades, persistence, and degree completion. The paper’s technical analysis was excellent, but the policy analysis wasn’t as sharp as it could have been.
Most scholarships these days can be described as “automatic” awards – if you have an 80% average in high school, you get $1,000; 85% you get $2,000, etc. From an economists’ perspective this is pure gold, because these arbitrary fixed points (“discontinuities”) permit some very interesting analysis. People on either side of the discontinuity are almost identical (e.g. someone with a 79.9% average vs. someone with an 80.1%), but get different financial benefits. By following the groups on either side of the discontinuity, and adding a little regression analysis, it’s possible to test the pure effect of the financial intervention.
The paper concludes that the effects of giving already high-achieving kids money in the form of automatic scholarships is essentially nil. No surprise there, though it’s nice to see it quantified: students who come in with an 80% average, or higher, are likely to complete school in any case. If they do run into trouble, money’s probably not the issue.
So far, so good. But the authors then went on to observe that the rationale behind these scholarships is to allow each institution to secure its share of “good” students, which is to the benefit of individual institutions, but not the system as whole (take away the scholarships and these students would still all be in the system, just distributed differently). So, they ask, what’s the public benefit of these scholarships?
This is partly fair, but also a little simplistic. First, scholarships are often funded from private endowments, so the “public money” argument doesn’t always wash. Second, Ontario universities aren’t UQs – they’re given substantial autonomy precisely because they’re meant to compete with one another. Go too far down the “system perspective” route and you start heading into absurdities. For instance, from a system perspective, there’s no difference where monographs actually reside, so why not dismantle the Robarts library and re-distribute its books elsewhere?
A stronger case against these automatic scholarships is that they’re ineffective on their own terms. They don’t actually persuade “good” students to move: institutions match each others’ awards so as to restore the equilibrium. It’s a pointless arms race.
Besides, why are institutions competing on price, rather than quality, anyway? My advice to Ontario institutions is this: take advantage of the introduced 30% tuition reduction program to “re-evaluate” your scholarships, and then quietly re-invest the money to improve teaching and services.
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I agree that automatic entrance scholarships are a pointless arms race and that institutions might be better served by competing on quality instead of price.
That being said, the option for a university ““re-evaluate” scholarships, and then quietly re-invest the money to improve teaching and services” might be difficult. As you mention, most of the scholarship come from private sources and the agreements signed with donors don’t usually permit a transfer of the money from scholarships to teaching and services.
Add to that the fact that many donors would not want to fund “teaching and services” and that almost all professors would be wary of “corporatisation” of the curriculum of private money was to go to teaching.
One of the ways universities could redirect the scholarship money would be to transfer the scholarship funds that come from the operating budget to teaching and services.
Yes, that’s more or less what I was thinking. Outside ON, though, I have a feeling a greater % of dollars in scholarships are from operating, so that kind of shift might have a bigger impact elsewhere.