Should a Rich Kid Accept a College Scholarship?
Should colleges offer scholarships to wealthy students in the first place? Knight Kiplinger tackles the ethics of financial aid.
By Knight Kiplinger, Editor in Chief
From Kiplinger's Personal Finance magazine, July 2008
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I recently heard that a cousin's son is attending our state university free, with a state-funded scholarship for brilliant students. His parents are millionaires and could easily pay the boy's college expenses themselves.
Do you think it's ethical for a college to offer such a scholarship to a student who doesn't need financial help? And should a wealthy family accept it?
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Those are tough questions, and ones we won't settle here. The vast majority of colleges offer a variety of scholarships, and they do so without regard to an applicant's financial need. Today only the most hyper-selective colleges, such as those in the Ivy League, base their financial aid solely on need.
Many colleges give tuition breaks to exceptional athletes, band musicians, debaters and other applicants who have special attributes the schools are seeking in their student body. I don't see anything unethical about this, as long as the students meet the college's admission standards (which, sadly, athletes sometimes don't).
Colleges often use no-need financial aid to lure the most academically gifted applicants. If that is done to enhance the intellectual caliber of the student body, fine. If it's being done primarily to improve the college's ranking in popular magazines, that's a little questionable.
Critics charge that these merit grants divert money from needy students and that they are disproportionately awarded to applicants whose parents can afford to live in the best school districts and enrich their children's lives with lessons in music, sports and other extracurricular activities. This is true, which is why I believe that most college financial aid should be based on need.
I would hope that a wealthy family whose child has earned a merit scholarship would consider repaying that amount -- and perhaps even more -- through tax-deductible donations to the college. (By the way, I benefited from a merit scholarship myself almost 40 years ago, and I've been taking my own advice ever since.)
Have a money-and-ethics question you'd like answered in this column? write to editor in chief Knight Kiplinger at ethics@kiplinger.com.
Reader Comments (23)
Posted by: jeff at 06/09/2008 07:09:12 AM
I guess my first point is millionares don't necessarily qualify as rich these days, a couple of million doesn't guarantee a plush retirement, and at the very least - its doesn't mean you can spend without thinking. I'll also argue that being frugal with your money, spending wisely and taking advantage of opportunities available is part of how you get and maintain wealth. I realize there is a large esoteric question here. If you are wealthy enough that it doesn't impact your finances to afford the college, should your child accept the scholarship? I'll argue a different question is truly being asked then - do the wealthy had an obligation to support the less fortunate in society?
Posted by: Ben at 06/09/2008 10:33:52 AM
The group offering the scholarship sets the criteria, if its to enhance the image of the school, then what difference does it make whether the person 'could afford' the tuition. This reminds me of friends who use to want me to pay for their movie ticket because I was working and they weren't although perfectly capable of working just chose not to. If a student works hard, and achieves, they should be eligible for a scholarship and certainly have no regret in taking it regardless of financial condition...
Posted by: jkh at 06/09/2008 11:14:44 AM
Repayment is a nice Idea, but not accepting it so that someone else can use it is a better one. Every once in a while you'll see that in sports where a scholarship was declined by a family willing to pay their child's way. Perhaps it happens on the education side, but that isn't news worthy?
Posted by: JT at 06/09/2008 11:37:55 AM
I think something that is being overlooked here is the fact that going to college is not about the parents. If this scholarship is based on achievments that this young man has made so far in his life then he deserves it. My roomate in college came from a fairly wealthy family that could have paid for everything but wouldn't. He agreed later that being forced to work harder to maintain his scolarship made him a better student. I do not think that merit based scolarships should have anything to do with need. There are separate need-based scolarships for a reason.
Posted by: Corb at 06/09/2008 11:57:17 AM
It's the student families at the extremely rich end of the scale that make us question the fairness of giving them scholarships, but what about the middle-class families that scrape to save for their kids' education? Oftentimes THESE families look "too good" on paper and their students are passed by in favor of students and families who are irresponsible with their finances. This is reinforcing the poor behavior and will perpetuate the problem. The only way for scholarship distribution to be truly unbiased is to look at student aptitude and performance, not how much money their parents make.
Posted by: Emelina Ormsby at 06/09/2008 01:00:31 PM
I think the scholarship should be accepted. It is not the family accepting it, it is the student. If the college is for brilliant students, then he clearly earned his way. You always want better for your kids and this is the perfect way to let him stand on his own two feet. it will be his responsibility to earn each year of that scholarship by getting good grades, attending classes and excelling. Also, there are many rich families in the world that will not pay their child's way, because they want them to work just as hard as they did.
Posted by: JP at 06/09/2008 02:27:22 PM
It should be based on the student's accomplishments, not their parents. If the family choses to pay instead than good for them, but I don't think it's right to not reward an outstanding student because their parents are wealthy. I think that would be taking us in a very dangerous direction. Taking from the rich to give to the poor is not what this country is based on. The rich give many scholarships willingly, but if they feel they are being treated unfairly those could stop. Just seems a bad direction to go.
Posted by: Zorro at 06/09/2008 03:03:50 PM
The answer is: absolutely, yes! It is ethical for a college to offer a scholarship to a student who doesn’t need financial help. Should a wealthy family accept it? Assuming we are talking about the student’s parents or legal guardians, the wealthy family and the student are still two separate entities, at least legally (ages 18 and over). Furthermore, some students are financially independent from their family. Therefore, it is not the said family’s prerogative to accept or deny their child’s scholarship. I do not wish to encourage or applaud the detachment of families in general from their now adult, college student sons and daughters. On the contrary, I am an advocate of family values and closeness. However, and especially in this case it is important to make the distinction between student and family. College students need to realize that they are adults now, that they need to support themselves. A “kicker” from mom, dad or grandma would certainly be welcome, but it ought to remain that: a complimentary source of income to that of the college students. College students have to rely on themselves most of the year. That is their job: to study. In order to excel at this job they have to be internally motivated. And what better way to accomplish that than to enjoy a scholarship thanks to your excellent academic achievements - a job well done. If my arguments above have failed to help you see things from my perspective, I leave you with this: To promote an intelligent, hard working and ethical future for our kids and for our country, we have to reward and promote outstanding academic and ethical behavior, and not reward poverty and encourage it.
Posted by: Mitch at 06/09/2008 07:47:38 PM
I think if the student earned it, the student should accept it. If the student and parents sit down and discuss it and want to turn down the scholarship, but still attend the school at their own expense, that is fine too. Don't penalize the student just because the parents are rich.
Posted by: duke at 06/11/2008 09:10:37 AM
...A bad direction to go? If you understood the disparity between those that attend college and those that do not, maybe your attitude would be different. A rich, smart kid is going to go to college regardless of if he gets a merit scholarship or not. A student who did not have the opportunities that money will bring in high school, such as a good school, supportive parents, and extracurriculars needs the assistance. Whereas, rich kids, or rather their parents, are simply looking for affirmation that their child is a success...they have something to talk to their rich friends about. They treat their child like a commodity...and parents like this should feel ashamed....
Posted by: Dennis at 06/11/2008 09:33:44 AM
As a former college athlete, I take offense of your...remarks regarding athletes. Are there no musicians, debaters, or other attributes in the entire world that go to college on a scholarship that maybe should not have been granted entrance to said college?...the university that I attended lowered the amount of my scholarship so that those that did not receive financial aid could benefit from the limited resources...with a ACT score of 26, I easily met the college's admissions standards.
Posted by: Patrick at 06/11/2008 11:03:28 AM
I agree with the previous comments. Students should not penalized for their parents' wealth and should absolutely accept a scholarship if it offered. That, however, is separate from--though related to--the valid concerns of many critics who argue that scholarship money could be used to help underprivileged students who show financial need. I do not believe there is much argument that wealthier students receive the lion's share of merit-based aid. But that is a different question entirely. Having said that, I would hope that the parents would congratulate their child for earning the award and donate at least a like amount to help fund need-based aid programs. That way, the student is not penalized but the the parents are helping to support the institution that has generously offered the scholarship to their child.
Posted by: Prof at 06/11/2008 11:44:56 AM
The contribution back to the college to repay the non-need based aid could require its expenditure for need-based aid, to be matched by the college. That would help reform the questionable practices of the college itself, which is the larger ethical problem. If the college refuses, then the contribution should go to a more ethical college that would agree.
Posted by: Shazamm at 06/11/2008 12:01:07 PM
...Of course the student should accept it....merit is still a worthy reason to reward a high-achieving student. I get tired of hearing that everything should be based on "need". Too many people are lined up at the taxpayer feed-trough waiting for a handout and the self-reliance that made this country great has gone down the drain...The only time a rich kid should give up a scholarship is if they cheated their way to good grades..
Posted by: Jae at 06/11/2008 01:19:26 PM
Sure it's legal to take a scholarship, even if you don't need. It's legal to eat at a soup kitchen even if you can afford to buy groceries. Ethical? Well, I wouldn't do it.
Posted by: RSF at 06/11/2008 01:26:23 PM
When it comes to families and higher education, the family is expected to support their children until age 24 according to the federal government. Is it right for less wealthy families to take out loans for their children to go to college while very wealthy families send their children to the same school for free? There should be some balance in the awarding of scholarships. Recognition for "scholarship" for the academically able in the form of a certificate or other physical recognition for the wealthy would be appropriate. Directing endowments to the non wealthy for tuition, room and board is appropriate.
Posted by: kathy at 06/12/2008 10:20:00 AM
The REAL idea is for middle class kids who are bright to get those awards! Those parents who made between $60 thru $80k this year are the ones whose kid got loans! Meanwhile, the "poor", the "underserved minority, the legacy...kids got freebies. Let's not also forget the jocks. I thought colleges were Institutions of HIGHER LEARNING, not farms for the NBA, NFL...
Posted by: anonymous at 06/12/2008 02:02:02 PM
Paying for college is not always the responsibility of the parents. Even if the parents are millionaires - is the student a millionaire? Probably not. We need to start forcing students to grow up - they will take a lot more pride in that college degree if they paid for it themselves.
Posted by: Woody at 06/24/2008 11:05:15 AM
I am a single parent of a student who finished in the top 3% of his class. Graduated several year ago, I attend pre-workshops for FASFA, etc. I thought I followed the proper protocal for preparing him for higher learning. I am sad to report that with the way the system is set-up up not only after submitting my financial aid were he denied assistance, his financial sheet came back that I were to pay 100% tuition. He was able to attend college for 1 year of which we currently still owes. I am by no means well off, and my income is less than 40K annually, of which I have 2 children to support. Unfortunately, my son is working 2 part-time jobs and interviewing for better positions so that he can continue with his education. As a parent it is extremely disheartening to see someone of his talent not have the opportunity to continue with his education. I have tried loans, but due to extremely strick credit guidelines that hasn't been an option for me. My son has resolved to survival mode and hope to return to school soon.
Posted by: artist1 at 11/28/2008 11:56:37 AM
I'm in the process of searching for colleges for my bright junior high school daughter. What disturbs me about this...article, and from what I've seen happening with kids who've graduated from her high school over the past 3 years, is that income and "color" are taking precedent over merit. Case in point - my neighbor graduated #7 in her class of 400+...Her best friend (half black) was #80-something, scored (lower on her SATs). Her parents earned 10% more than my neighbor's....this girl got into more Ivy-Leagues and received more scholarship offers than my white neighbor. She's now on a full ride to Notre Dame, whereas my neighbor's kid is shelling out over 20 grand a year at a local private college...My husband and I have worked and sacrificed for years...not going out, saving our money, buying less expensive and used cars, etc. We're like the parable of the ant and the grasshopper, saving for our kid's future and our retirement. Now that he finally has the job of his dreams (making over 150K), this fact alone will prevent my very brilliant daughter from going to an Ivy-league (or high tiered) school, because we can't afford the 50K per year tuition (don't forget, we have to plan for our own retirement, and I've been ill with several cancers to boot). The system is NOT fair. There SHOULD be merit-based scholarships along with all of the others....Why should people like my family, who have sacrificed so much to work and finally get ahead, be penalized? (Did I forget to mention that my husband and I put ourselves through school, had over 100K in loans, served overseas in the military, far from family and that which is familiar?)...Merit, ability, and the work ethic SHOULD count for something...shouldn't it?
Posted by: poor rich kid at 07/17/2009 06:15:56 PM
i'm a rich kid and i'm going to be a freshman in the fall but without the scholarship i received i would be forced to go to a junior college despite the 33 ACT...the fact of the matter is that my parent's "money" is non existent because they spend faster than they earn and have been doing so for years. of course no one outside the family knows that. so despite my "rich" parents i had to get a good scholarship and mine is still $2600 short and the money is coming out of MY pocket. what bugs me is that all of the small supplemental scholarships went to the athlete, who already has a full ride playing volleyball at her school, despite her lower ACT score and she took them all! i needed that money! you have no idea what i would give to be as poor as my friend who got about $6000 more than i did because she has financial need...sorry, i've been bottling all that up for a while now.
Posted by: Michael at 08/20/2009 09:29:54 PM
I do not agree with any of the points above. I have received admission to a Top 10 MBA Program and was not granted a scholarship. In the application, I was asked about my father's position. He has held important executive positions in multinationals. and he can easil pay for my tuition. But I am responsible for my education, he is not. He should be able to enjoy his money because it is the reward for his efforts. I on the other hand, do not have the funds to go abroad and pay almost 100,000USD for the program, and I think it is unfair to give that scholarship to someone with more need and less merit. I am just married, and my wife also got accepted into the same program, and we certainly do not have the funds to both go to do an MBA without financial aid.
Posted by: Bob at 09/07/2009 12:42:33 PM
I have a daughter that has had 5 full ride offeres for ncaa div 1 soccer programs and a few are worth close to $200 k for the 4 years. She really wants to go to a PAC 10 program that would cost us over $15 k a year as they would only offer a percentage. Im more for the education and the full ride but I seem to have no say. Its very hard to explain to her that this may be the offer of a life time.