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.  

As they look at these programs, colleges are “trying to balance the missions and values of their institutions and being fully compliant with the law as determined by the Supreme Court,” Draeger said. “They’ll need to be doing risk assessments.”  

“There will still be unanswered questions about where exactly some of these lines are,” he added. 

Indeed, there isn’t much legal precedent colleges can use to wade through these questions. In the 1990s, a federal court of appeals struck down a scholarship program at the University of Maryland geared towards Black students, arguing that the school couldn’t show the scholarship was necessary to compensate for past discrimination. Now most schools pursue race-focused scholarships to achieve the educational objective of diversity. Federal courts haven’t weighed in on the use of race-focused scholarships to increase diversity. 

Battle over race and education could reach financial aid

Though the opinion didn’t discuss financial aid directly, the battle over race and education could reach that realm, said David Hawkins, chief education and policy officer at the National Association for College Admission Counseling.  

Given the “litigious nature of the folks who are in opposition to race-conscious admissions, it seems likely to move that direction once this case is done,” he said. 

If history is any indication, schools are likely to adjust their scholarship programs in response to the decision. After the Supreme Court upheld the use of race-conscious admissions policies as part of a holistic review of applicants in 2003, some colleges opened scholarships traditionally reserved for underrepresented minority students to all students, the Wall Street Journal reported at the time. 

If a familiar pattern plays out in the wake of the decision released Thursday, the impact of the court’s ruling could stretch beyond the colleges that use selective admissions, said Dominique Baker, an associate professor of education policy at Southern Methodist University. The bulk of college students attend an institution that admits most applicants and so aren’t affected by restrictions on admissions, but these colleges do have scholarship programs and other initiatives that use race as a criteria.  

“Institutions that do not have the same admit rate as Harvard can still have dramatic effects from these types of decisions,” she said. 

Working through these issues could be ‘politically touchy’

Working through these issues could require some uncomfortable conversations for college leaders. Some of the funding colleges use for scholarships comes from donors who may have endowed a scholarship program with a focus on students of a specific race. In many cases those kinds of scholarships are subject to nondiscrimination laws. 

To mitigate the risk of a school getting sued over a program, colleges can discuss the scholarship with a donor to see how it can be modified to both achieve the donor’s intentions and comply with the law.

Draeger said those conversations can be “politically touchy.” 

“An institution would have some experience having to go back to donors and talk to them about changing criteria if they have to be compliant with the law,” he said. “Those aren’t easy conversations to have, but those are conversations that schools have some experience with.”  

In situations where the donor is deceased, colleges likely have to go through a separate legal process to change the purpose of the contribution.

Schools may also increasingly turn to another strategy that’s commonly used to ensure their scholarship programs don’t violate nondiscrimination laws. Through this tactic, known as pool and match, colleges pool funding they receive from several donors with some shared scholarship criteria into a pot of money they dole out to students. 

In determining which students receive the funds, the colleges use the common set of race-neutral criteria. Once the school comes up with a list of scholarship awardees, they match recipients who meet individual donor’s more specific criteria — say a requirement that all students benefiting from their funds are Black men — with that funding. 

Decision could affect how schools use their financial aid dollars

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. 

As colleges review the decision, Voight, Draeger and others are encouraging higher education leaders to stay committed to their goal of achieving equity as an educational objective. 

“We’ll be urging all of our institutions to understand, work with their legal counsel to be fully compliant with the law without overreacting to what the Supreme Court says,” Draeger said, and “still acknowledging that there are pretty big discrepancies when it comes to race and access to postsecondary outcomes.”