Supreme Court’s college-admissions decision could undermine race-based scholarships and financial aid

In the months leading up to the decision, many colleges have been scrutinizing their scholarship programs, including those completely controlled by the school and those endowed through donors, to determine whether they may be affected by a curtailing of race-based admissions policies, said Justin Draeger, the president of the National Association of Student Financial Aid Administrators.

The decision may also push colleges to rethink their financial-aid programs. With race-conscious admissions banned, financial aid becomes an even more important tool to build diverse classes.

It’s not uncommon for colleges to direct significant funding to students without financial need. For example, the Institution for Higher Education Policy, found that between 2001 and 2007, 339 public four-year colleges spent $32 billion on non-need based aid programs. During that period, more than half of the schools studied doubled the amount of money they spent on non-need based aid, IHEP found.

Directing some of that funding towards students with financial need “could make a really substantial difference for students from low-income backgrounds, many of whom, not all of whom, are students of color,” said Mamie Voight, the president and CEO of IHEP.

Still, that could be challenging for some schools, particularly those who have struggled to receive adequate state funding over the past few decades. Using financial-aid dollars to lure high income students who can pay near full price by giving them a small discount can be more beneficial to a university financially than using that funding to fully subsidize a smaller number of low-income students, Voight said.

“Institutions are pitting those priorities against each other in terms of being able to meet their bottom lines and really prioritizing their equity objectives,” Voight said.