Rich Students Now Get More College Aid
Two new reports published this week confirm something financial aid experts have warned about for years: colleges are now giving slightly more grant money to high-income students than to low-income ones. The gap is small in dollars, but it reflects a decades-long shift in how schools use financial aid — less as a tool to help students who need it, and more as a pricing strategy to attract students who can pay. If you are counting on need-based aid, this changes how you should read your award letter.
This is not what the financial aid system was designed to do.
When Congress created federal student aid in 1965, the concept was simple: help students who could not otherwise afford college. Need-based grants, subsidized loans, work-study — all of it was built around financial need. But over the past 25 years, something else has taken hold at American colleges and universities. Inside Higher Ed reported on April 22, 2026, that two new studies show merit aid — money given based on grades, test scores, or factors unrelated to income — has been growing faster than need-based aid for decades, and is now doing something the system's architects never intended.1
At both public and private colleges, high-income students now receive slightly more grant money on average than their low-income peers.
What the Numbers Show
The data in these reports is specific. At public institutions, the median total financial aid award for students from the highest-income families is $4,000 per year. For students from the bottom income quartile — those with the most demonstrated need — the median is $3,374.1
At private colleges, the gap is larger: the median grant for high-income students is $19,214, while the lowest-income students receive $18,200.1
75.2%
That 75.2 percent figure is the one that should make families with real financial need pause. More than three out of four students who had zero financial need at private colleges with small endowments received grant money anyway. At private colleges with large endowments, the average award given to a student with no financial need was $24,703.1
Meanwhile, a first-generation student whose family earns $40,000 a year may receive a smaller package from the same institution.
Why Schools Do This
Colleges are not acting out of indifference. They are solving a financial problem.
Most private colleges — and many public ones — need students who contribute to operating revenue. A near-full-pay student brings in more net tuition than a high-need student who receives a large grant. So institutions offer merit scholarships to students who are academically strong and come from families that can mostly pay. This practice is called enrollment management, and it has become standard.
The NACAC study covered in Inside Higher Ed found that the share of students receiving merit aid from their college grew 19 percentage points at private colleges and 18 points at public colleges between the 1999–2000 and 2019–20 academic years.1 Need-based aid grew considerably more slowly over the same period.
If a college has a "meets 100% of demonstrated need" policy — schools like MIT, Harvard, Princeton, Amherst, and Williams — this trend mostly does not apply to you. Those schools use need-based aid almost exclusively. The merit aid shift is concentrated at mid-tier private colleges without that level of endowment depth.
The schools where this pattern is most pronounced are smaller private colleges with limited endowments. They face the most enrollment pressure and use merit scholarships as discounts off sticker price to attract students who might otherwise choose a cheaper competitor.
What This Means for Your Aid Package
If you are from a family with genuine financial need, three realities are worth understanding right now.
Your need-based award may be smaller than the number looks. When a school uses part of its financial aid budget for merit awards to students who don't need it, less remains for students who do.
Your financial aid award letter can be misleading. Merit scholarships sometimes appear in the same column as need-based grants. Learning to read an award letter correctly means separating merit money — which can be lost if your GPA drops — from true need-based aid.
Comparing offers is not optional. Two schools offering what looks like the same package can leave you with very different out-of-pocket costs over four years. Use the net price calculator on each school's website to understand what you'll actually pay, not just what the sticker says.
Merit scholarships almost always have GPA requirements for renewal — typically 3.0 or 3.25. If your grades slip below the threshold, you could lose thousands of dollars per year with little warning. Ask each school for renewal conditions in writing before committing to attend.
Schools That Actually Prioritize Need
The most reliable need-based aid comes from schools that have formally committed to meeting 100% of demonstrated financial need without loans. Beyond the Ivy League, a number of liberal arts colleges and selective public universities have adopted this standard. If you are not sure whether a school meets full need, compare your financial aid offers carefully and look up where each school stands on need-blind vs. need-aware admissions.
You can also look at which colleges have the most merit scholarships and factor that into your list strategy — sometimes a school with a large merit scholarship program will give a high-achieving, lower-income student a more generous total package than a school that claims to focus on need.
What to Do Before May 1
With the college commitment deadline approaching, here is what matters most right now:
- Ask each school for a line-by-line breakdown of your award — separating grants, merit money, loans, and work-study
- Look up renewal requirements for any scholarship in your package
- Run the net price calculator at any school you are still considering
- If your package seems low relative to your family's income, appeal before the deadline
- Read your award letters through the lens of what the money actually covers, not what the headline number says
The financial aid system was built to help students who cannot afford college. In 2026, it is doing that job unevenly. Understanding how it actually works — not how it was designed to work — is the first step to getting the money you actually need.