The Impact of Admission and Financial Aid Policies on the Percent of Under-Represented Minority (URM) Students at the Top Liberal Arts Colleges in the United States

Abstract

Elite higher education has the potential to increase social mobility, but access to these institutions is not equal. These institutions have historically enrolled low fractions of URM students. United States colleges have enacted admission and financial aid policies with the intent of increasing the racial/ethnic diversity of their student population. Few studies have examined if enacting certain admission and financial aid policies increases student racial diversity at elite colleges. This thesis leverages changes in three higher education policies (universal no loan financial aid policy, need blind admission policy, and affirmative action policy) to identify their effect on the percentage of underrepresented minorities (URM) in the student body.

I find that switching to a universal no loan financial aid policy increased the percent of URM at the top liberal arts colleges in the United States by 2.34 percentage points. Moreover, switching to a need blind admission policy increased the percent of URM by 1.97 percentage points. Due to a lack of policy variation, this thesis cannot draw significant conclusions about the effect of affirmative action policies on the percent of URM.

The most robust finding and policy recommendation is that colleges should enact a universal no loan financial aid policy in order to increase their percent of URM students. Colleges should also consider enacting a need blind admission policy to increase their percent of URM students. Future research must be conducted on a larger scale to understand through what mechanisms admission, financial aid, and affirmative action policies at the elite colleges in the United States impact student racial diversity.