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The High School Senior's Scholarship Dilemma

The High School Senior's Scholarship Dilemma

I’ve noticed a troubling trend in financial aid that has me questioning how young people make decisions about where to go to college. It goes like this: Billy takes the ACT, scores 32, applies to several colleges and then takes the best scholarship package offered. Nothing new there. The new trend—or perhaps I’m just now catching on—is that many young people who based their college choices on those scholarships, have lost them by the beginning or middle of their sophomore year due to GPA. I’m not talking say, 2.2 GPA. I’m talking 3.5. That’s where the basement begins for many schools, especially in fields like engineering. I couldn’t find statistics on this, because the only national database involves federal aid packages, which have a much lower requirement. So this is, for now, just an observation, but it’s based on a lot of contact with a lot of college students.

So, where does that leave the student who falls “way down” to a 3.3 GPA? Dropping out, tapping the family savings, or applying for federal loans or grants. Each is a perfectly legitimate way to finance an education, but that dilemma begs two questions, one systemic and the other personal.

Colleges must know quite well how many scholarship students they lose each year. It’s not a stretch to imagine that they might be counting on those losses. From my experience, after a student goes off scholarship, most stay in college and maintain a GPA in the 3.0 range. Good enough to succeed, but not good enough to reinstate their funding. In business we call this a “loss-leader.” You give something away for free and hope to retain the customer after the introductory offer is over. Then the college recovers the scholarship and can give it to someone else. In business, we call this “churning.”

Whether this is provable or not, it leads to an important question: should students go to a college because they’re given free money on the front end? I’m starting to think the answer is “no.” They should look for the college that best fits them and which they can sustain over the long haul, scholarship or not. Once they’ve signed up and had their free year or two, they may well be hooked. They have friends, a job, a sorority or fraternity, a mascot. They’ll want to finish out and become an alum, even when the cost goes up from zero to full price.  And if that’s an out-of-state college with out-of-state tuition, they’re going to end with an enormous hit to the family coffers, or a unnecessarily large pile of debt.


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