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Journal of Student Financial Aid
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An Optimization Model for the Allocation of University Based Merit Aid
Vol. 40, No. 2, 2010 p. 21
by Paul K. Sugrue
The allocation of merit-based financial aid during the college admissions process
presents postsecondary institutions with complex and financially expensive
decisions. This article describes the application of linear programming as a decision
tool in merit based financial aid decisions at a medium size private university. The
objective defined for the model is to maximize the quality of the incoming class as
measured by average combined SAT scores. The approach involves using the yield
rates from the previous year for each combination of SAT score and merit aid award
while eliminating from consideration combinations for which insufficient data is
available. Parameter estimation is based upon 2006 data and the results of the
model are measured against 2007 data. It is shown that the modeling approach
yielded a higher average SAT scores when applied to actual 2007 admissions data.