Over the past decade, the growth in institutional financial aid at four-year colleges has benefited affluent students more than needy students, a new report shows. This has occurred as institutions gradually have shifted emphasis from need-based to merit-based aid.

Institutions are free to set aid policies to benefit whomever they choose, of course. But as Congress looks at reauthorizing the Higher Education Act, the law that defines federal financial aid programs, a primary concern is ensuring that lower-income students have the opportunity to go to college.

"What Colleges Contribute," a report from the U.S. Department of Education, shows colleges--especially in the private sector--skewing institutional aid toward wealthy students. The report suggests that institutions of higher education now distribute a greater proportion of their aid budget based on merit instead of need, affecting access for low-income students.

Comparing aid data collected from the National Postsecondary Student Aid Study from three different academic years, researchers found increases both in the number of full-time students at public universities receiving institutional aid and in the average amount of aid granted. This finding holds across all income groups.

• In 1992-93, 17 percent of undergraduates at public institutions received institutional aid averaging $2,200 (in 1999 dollars). In 1999-2000, 23 percent received this aid, averaging $2,700.

• At private, nonprofit institutions, 47 percent received aid averaging $5,900 in 1992-93, compared to 58 percent in 1999-2000, averaging $7,000.
  Yet the data show an alarming trend: The increases have been greater at the upper end of the income spectrum.

• In public institutions, the percentage of undergraduates in the lowest-income quartile who received institutional aid rose from 24 percent in 1992-93 to 29 percent in 1999-2000. Their average award during the same period rose from $1,900 to $2,300. For undergraduates in the highest-income quartile, the percentage receiving aid grew from 12 percent to 18 percent over that period, and the average aid award grew from $2,400 to $3,200.

• In private institutions, during the same period and within the same income quartiles, the percentage of low-income undergraduates receiving institutional aid rose from 53 percent in 1992-93 to 56 percent in 1999-2000, and the aid award rose from an average of $5,500 to $6,200. For the upper-income quartile, the percentage receiving aid increased from 35 percent to 51 percent in that period, and the average award increased from $5,500 to $6,800.

• Middle-income students at private institutions were the biggest beneficiaries of institutional aid. In 1992-93, some 58 percent of undergraduates in this income group received on average $6,400; seven years later, 63 percent received aid averaging $7,500.

The study also found that institutional aid does affect retention: "full-time undergraduates who received institutional grant aid in public institutions were more likely than their unaided counterparts to earn a degree from or still be enrolled at the awarding institution six years after first enrollment," says the report.