GAO Report: College Collaborations on Financial Aid Packages Fail to Improve Affordability for Students

GAO Report: College Collaborations on Financial Aid Packages Fail to Improve Affordability for Students
By Charles Dervarics

A federally sanctioned experiment allowing collaboration among select colleges in the development of financial aid packages has not increased enrollment or made higher education more affordable for minority students, a watchdog agency says.

The Government Accountability Office reviewed a policy in which 28 highly selective colleges received an antitrust exemption to use a common framework to assess student financial need. A small number of the colleges had engaged in similar practices for years, though the U.S. Department of Justice filed suit in 1991 claiming the practice may result in price fixing.

Participating colleges argued instead that collaboration could result in more open, common-sense financial aid packages. Congress agreed to grant a limited exemption for the institutions to test the concept through 2008.

But GAO’s review of this approach, formally called the “consensus” method of awarding financial aid, found few gains for needy students. “The consensus approach did not significantly increase the likelihood of enrollment of low-income or minority students or any student group,” the agency concluded in a report released in mid-September.

These select colleges — including Duke University, Northwestern University and several Ivy League institutions — also had higher-than-average cost increases during the past five years, GAO reported. Tuition and fees increased by 13 percent at these institutions, while their institutional financial aid increased by only 7 percent. The 13 percent increase in tuition and fees was 6 percentage points higher than the average increase for four-year colleges and universities not in the consensus program.

In its report, GAO acknowledged the program produced a few desired gains but ultimately had little effect on a student’s bottom line. For example, Asian, Hispanic and middle-class students all received somewhat more need-based aid from these colleges. However, this was offset by decreases in other areas.

GAO said it was likely that colleges repackaged their aid dollars, reducing academic or athletic scholarships — which are not need-based — for these groups.

The review also found that low-income students from these schools received more total aid — grants and loans — than students from other schools. But the increase was solely due to the increased availability of loans, which must be repaid. “The amount of grant aid that these students received did not significantly change,” the agency found.

The GAO report has been met with criticism from the participating colleges. The work of the coalition “should be celebrated and promoted,” says Dr. Morton O. Schapiro, president of Williams College, one of the member institutions.

In a detailed letter challenging the GAO findings, Schapiro said the program helped students by providing a more “transparent” financial aid system that was easier to navigate for families.

The letter also argued that the experiment did more to engage college leaders in the financial aid process. “We have empowered aid directors to exercise carefully defined professional judgment in support of students with unusual circumstances,” he wrote. In addition, according to Schapiro, college presidents are taking a more direct role in setting financial aid policy for their institutions.

Schapiro also noted that the GAO report confirmed that the consensus model has not resulted in any price fixing or negative effects on students. “There is no evidence that exempting our institutions from antitrust laws has stifled competition or that there has been any collusion aimed at reducing student aid expenditures at member institutions,” he wrote.

The main intent of the experiment, Schapiro said, was not to improve the affordability of college for low-income students or under-represented groups. Instead, lawmakers wanted to create
“a stable environment grounded in common sense” that would reduce confusion for families.

Other institutions involved in the experiment were: Amherst College, Boston College, Claremont McKenna College, Columbia University, Cornell University, Dartmouth College, Davidson College, Emory University, Georgetown University, Grinnell College, Haverford College, Massachusetts Institute of Technology, Middlebury College, Pomona College, Rice University, Swarthmore College, University of Chicago, University of Notre Dame, University of Pennsylvania, Vanderbilt University, Wake Forest University, Wellesley College, Wesleyan University and Yale University.

The report, “Schools’ Use of the Antitrust Exemption Has Not Significantly Affected College Affordability or Likelihood of Student Enrollment to Date,” is available online at www.gao.gov.



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