Need-blind college admissions, financial aid and student loan programs

Abstract We investigate the impact of need-blind admission policy in conjunction with financial aid systems. We first show that for the need-blind admission policy to effectively promote the total enrollment of financially disadvantaged students, colleges should be able to make financial aid offers contingently on the student’s financial need level but not on their academic ability. Next, we argue that the existing federal student loan program inadvertently exacerbates the scholarship budget disparity between colleges, consequently impeding the enrollment of financially disadvantaged students. To address this problem, we deliberate on potential modifications to the student loan program and propose a supplementary matching loan scheme.