Can Merit Aid Affect A Choice Between Similar State Universities?

There is a saying among North Dakota football fans when describing the rivalry between their state universities: If you want to work the farm, you go to North Dakota State. If you want to own the farm you go to the University of North Dakota.

It’s a fair bet that residents of other states say similar things when there’s a choice between two flagship state universities, one being home to the agricultural school. Such states include not only North Dakota but also Colorado, Indiana and Iowa, among others.

However, if you’re considering merit-based aid versus a reasonable sticker price between flagship state universities in your home state, you might learn that different schools have different pricing practices, even when they do similarly well at retaining and graduating a freshman class.

In Iowa, for example, the flagship state universities are Iowa State University and the University of Iowa. Both are equally selective; they each admit just over 80 percent of the students who apply. Both draw over 30 percent of their students from other states. Both retain at least 86 percent of their freshman classes, which is very good.

However, Iowa State offers a higher percentage of its students merit based aid (33 percent vs. eight percent) and charges non-residents significantly lower tuition and fee (approximately $21,500 vs. $28,400). It also meets a higher percentage of financial need (80 percent vs. 67 percent). Iowa State offers cooperative education across agriculture, business, engineering and science programs. The University of Iowa offers it only for engineering.

While the four-year graduation rate for Iowa State is lower (41 percent vs. 51 percent) with more science and engineering-oriented majors, the five-year graduation rates are about the same (68 and 69 percent). Iowa State grads in 2015 who took out loans owed, on average, a little less, too ($27,500 vs. $28,700) but they also paid less.

Iowa State is hardly the “lesser” school.

But it is likely to be the better buy when a student is considering similar academic programs.

Indiana has two fine flagship state universities: Indiana University-Bloomington and Purdue University-West Lafayette. Both are also sports rivals. Indiana’s most publicized programs are in business, journalism, music, public policy and theatre. Purdue’s are in agriculture, business, computer science, engineering and technology. With the clear exceptions of agriculture, engineering, technology and pharmacy, many majors offered at Purdue are also offered at Indiana.

Because of the engineering and science offerings, Purdue is the more selective school. It offered admission to 59 percent of the students who wanted to be freshmen this fall. Indiana admitted 78 percent. Both schools draw more than a third of their students from other states. Purdue retained 92 percent of last year’s freshman class, which is excellent, though Indiana’s freshman retention (89 percent) is quite good.

Indiana and Purdue charge residents about the same. But Indiana charges non-residents about $5,600 more ($34,200 vs. $28,800). Yet a much higher percentage of Indiana students (29 percent versus 12 percent) receive merit-based aid. However, Purdue does a better job of fulfilling need (86 percent versus 67 percent).

Indiana graduated 60 percent of the freshmen who entered in 2009. Purdue did worse at 47 percent. Schools that offer more of the science and engineering majors usually do. Purdue also has a very large cooperative education program around these majors; students would be there for five years instead of four. The five-year graduation rate is an excellent 71 percent.  Graduates of both schools in 2015 who took out loans owed, on average, about the same: $27,700.

Indiana residents have the enviable choice of paying just over $10,000 in tuition and fees for either school. Purdue starts out with a lower sticker price and does a better job at fulfilling financial need. Indiana is more aggressive at using merit aid. It’s conceivable that a non-resident who is interested in both schools could end up paying the same.

Within Colorado the University of Colorado is the greater draw for non-residents versus Colorado State (40 percent vs, 21 percent). Yet it charges them around $6,700 more each year in tuition and fees ($35,100 vs $28,400) while trying to make up some of the difference for some students through merit aid. Colorado State does a little better at retaining their freshmen (86 percent vs. 85 percent). Neither school graduated half of their 2009 freshman class on time (Colorado State 41 percent, Colorado 47 percent).

Colorado awards merit aid to a higher percentage of its students (26 percent vs. 11 percent), yet its 2015 graduates who borrowed, owed, on average around $2,200 more. This tells me that the University of Colorado does not usually make up the difference in costs through merit aid when someone is interested in their school as well as Colorado State. Its conceivable that a non-resident will almost always end up paying more to attend the University of Colorado. But Colorado State, while less expensive, is far from a lesser school, unless you care about seeing teams that compete in a more visible sports conference.

In looking at the rivalry between North Dakota and North Dakota State, the schools are quite similar in undergraduate student body size (11,600 vs. 12,000), selectivity (both accepted over 80 percent of applicants). The majority of undergraduates at both schools come from outside North Dakota. North Dakota State was a national champion in football, North Dakota in men’s hockey. North Dakota State is the more expensive school by $900 for residents ($9,000 vs. $8,100) and by $500 for residents ($19,800 vs. $19,300).

North Dakota is the more aggressive school when it comes to using merit aid (29 percent of the student body vs. 5 percent). However, freshman retention rates are the same (79 percent) and the four-year graduation rates are close (27 percent at North Dakota State vs. 24 percent at North Dakota).

In this case, the intention of awarding merit aid might have been to recruit a better student body by offering a similar education at the more reasonable price. However, if a university tries to use money to recruit better students it will also need the academic programs, services and activities to keep them. Colleges sell not only an education; they also sell services performed by people. Those people need to deliver on the promise behind the merit aid.

Need more insights about merit and need-based scholarships? Contact me at stuart@educatedquest.com or call me at 609-406-0062.

Sharing is caring!