For financially needy students attending both traditional and online schools, financial aid plays a significant role in their likeliness to enroll and persist with their efforts to get a degree. Several studies have shown that the availability of federal and institutional aid directly effects the enrollment rates and persistence of financially needy students.

Online Schools’ Financial Aid Too Often Goes to Those Who Don’t Need It

Despite the fact that financial aid is an incentive for financially needy students to enroll in and continue with their studies in college, both online or on-campus, a recent study presented at the Association for the Study of Higher Education revealed some disturbing information. The amount of institutionally funded financial aid has increased in the past ten years, yet, merit-based aid has become so prevalent that it has significantly reduced the amount of need-based aid available to the students who need it most.

Merit-based aid is targeted to students who are high achievers; it does not consider the financial need of the student, thereby rewarding top performing students, regardless of whether they need the aid or not. Colleges and universities, both private and public, want to attract such students, and, knowing that low-income students can get federal financial aid, tend to allot more school funding to merit aid rather than need-based aid. The irony is that these high-achieving students are also the most likely to enroll in and continue with their college pursuits even if they don’t get financial aid.

Given the Obama administration’s emphasis on making a college education more accessible and affordable to a greater number of nontraditional students, policies that influence the distribution of student aid will probably be up for some serious reevaluation.

A Happy Medium: Merit-Based and Need-Based Aid for Disadvantaged Students

When it comes to online schools’ financial aid, some programs have shown that providing a mix of need-based and merit-based aid to financially needy students is a winning combination. One program found that students were more likely to enroll in college as full-time students, had greater success completing and passing courses, and earned more credits than their fellows who received need-based aid only.

The Future of Online Schools’ Financial Aid Programs

The future of college financial aid is still up in the air, along with the debate about merit-based aid vs. need-based aid. Whatever changes are made to student aid policies, online schools’ financial aid programs will experience the same changes as funding for campus schools. What is not yet resolved is the best system for meeting the financial needs of disadvantaged students, and how success should be measured.