The prolonged economic slowdown is causing colleges and universities to cut back on financial assistance and admit more students who can pay full tuition.
The downturn took a bite out of colleges’ large endowments, making it more difficult to provide financial aid to students.
“Combine that with more students than ever attending school and a lot more students needing financial aid because their own economic situations have been affected,” says Haley Chitty, spokesperson for the National Association of Student Financial Aid Administrators (NASFAA). “Suddenly the picture is that these institutions are becoming more and more financially drained.”
The Wall Street Journal reported last month that cash-strapped colleges are adjusting from a “need-blind policy,” that doesn’t take into account a student’s financial situation to pay, to “need aware,” where a student’s financial situation is taken into consideration for admission.
Howard Greene, educational consultant and author of Making it Into a Top College, says that this concept is nothing new and is more of an aberration than a long-term trend.
“Historically, there have been no more than a handful of colleges with a level of endowment to financial security to do need-blind admissions,” he says. “What we’re really seeing is a retreat to the normal practices of all the previous years.”
One group that is more likely to be admitted if they can pay full-price is international students. Jon Reider, director of college counseling at San Francisco University High School and former admissions officer at Stanford University, says there is a lot of money overseas, which is appealing to colleges.
“Twenty years ago when they started admitting [international] kids, nobody in China had the money--we had to put out a lot of money to get kids from mainland China,” he says. “But now, China has a thriving economy. You don’t have to spend money on China anymore.”
An increase in international students won’t be the only change in college populations; cuts in federal and state funding are causing public universities to be increasingly interested in admitting a higher percentage of out-of-state candidates.
“There's a real tension because as tuitions have increased everywhere, more and more families have returned to their state schools,” Greene says. “They want those places for their kids as taxpayers. That tension works against bringing in out-of-staters, who are strong students that are paying private university tuitions.”
Considering all of the factors, Greene and Reider agree that middle class applicants with mediocre academic histories will be feeling the most pain overall.
“Students and families who are really more and more under the gun is the less-than-outstanding student in the middle income where colleges are not going to use their limited resources for those families,” says Greene. “That's the group that's hurting.”
The U.S. House of Representatives has proposed cutting Pell Grant awards by more than 15% , a program that provides grants to 9.4 million low and moderate income undergraduates.
“It's expected that more than 9 million students will benefit from this program in the  loan year,” says Chitty. “It's the cornerstone of the federal student aid program.”
Greene worries the amount of loan debt that students will have to take on will discourage them from an education.
“I think it will chase away the lower income families, the very group that colleges say they want more students from to diversify the schools and bring education to them,” he says.
However, Greene explains that the idea of a growing need-aware admissions trend and cuts in some federal student aid programs should not deter students from applying to college. Other forms of federal aid and merit-based scholarships are available for those who are eligible.
“Don't panic if you're good student and you've got a good profile,” he says. “There's so much money out there--don't let this throw you off by any means.”
While some schools may be desperate to alleviate their strained budgets, Chitty says that a change in circumstances will allow schools to breathe a little.
“I think once the economy starts to turn around and there's more money available to them, you'll see a reinvestment in their core goals,” he says. “That generally, across the board for higher education institutions, is to provide quality education to a diverse set of students, and that diversity includes low-income students.”