Dive Brief

• Flagship universities in 46 states grew their non-need-based aid by 65% over the past five years, outpacing a 53% increase in need-based aid, according to Bloomberg Government's analysis of data from the Common Data Set Initiative. 
• Those universities awarded $1.2 billion of non-need-based aid in the 2017-18 academic year, with the average merit award totaling $7,200 for students "lacking financial need," the analysis found. Need-based aid jumped to $2.2 billion, with the average student receiving $5,800.
• About half (49%) of students attending those flagships had financial need. Of that group, nearly 80% got institutional need-based aid. Around 29% of students with no financial need received non-need-based aid. 

Dive Insight

Bloomberg's analysis points to a practice more colleges are using to grow their enrollments — tuition discounting.

Experts say it draws on a common retail strategy, in which shoppers may be more likely to buy something if they think they are getting a bargain, The Wall Street Journal reported. And often, discounts are used to attract wealthier students who ultimately will pay more than lower-income students. 

Yet other research has shown states still view need-based aid as a bigger priority than merit or academic scholarships. State allocations for undergraduate need-based aid grew by 2.9% from 2015-16 to 2016-17, while other types of aid grew by only 0.7% according to data cited by Inside Higher Ed. 

Some colleges are walking back their focus on merit and academic scholarships. At Tulane University, for instance, four in 10 undergraduates received non-need-based scholarships, The Journal reported. Recently, however, officials there have said they plan to make merit aid a lower priority in order to focus on need-based aid. 

Public colleges have been called out for using other strategies aimed at boosting tuition revenue as they grapple with reduced state support. For example, a recent report from The Joyce Foundation found that in an analysis of 15 public research universities, 12 prioritized wealthy out-of-state students in recruiting.

Further, universities with lower levels of state support focused more on out-of-state recruiting, which the report's authors said highlights a "broken" higher ed funding system. 

State funding levels, which haven't fully recovered since dropping in the Great Recession, are a major reason for such trends. On average, states spent about 16% less per student in 2018 than they did a decade prior, according to data from the Center on Budget and Policy Priorities (CBPP).

Even so, the CBPP calls on states to make college more accessible to low-income students, noting that nearly one-quarter of financial aid awarded was non-need based.