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Students walk around York University’s Keele campus, Toronto January 8 2014.

Fernando Morales/The Globe and Mail

As one of Canada's top scholarships is awarded this weekend, some experts are questioning the value of such merit-based awards and whether it's best to give money to those who need it or to those who are successful.

The Loran scholarships were started more than 20 years ago by the Canadian Merit Scholarship Foundation. This year's awards, which cover four years of tuition and living expenses up to a maximum of $80,000, will be handed out to 30 students.

But questions are being raised about how effective such merit-based awards are when it comes boosting postsecondary enrolment, with research into who receives those scholarships suggesting they often go to better-off children with wealthier parents.

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Children from higher-income families are 10 per cent more likely to win a merit-based scholarship than students from low-income families, according to a 10,000-student survey in Ontario conducted by Higher Education Strategy Associates.

The survey defined income by the level of education the parents had. The parents of high-income families had a master's degree or higher, while parents from lower-income families had a high school diploma or less.

Merit scholarships – awards based on grades, character, proposals or accomplishments, as opposed to financial need – make up about $1.5-billion of the $8-billion in postsecondary student aid given annually, according to Higher Education Strategy Associates.

James Turk, executive director of the Canadian Association of University Teachers, said if the goal of scholarships is to make universities more accessible, money should be distributed to the needy rather than the successful.

"The evidence is consistent that needs-based scholarships are far more effective than merit scholarships," Mr. Turk said.

Needs-based scholarships require applicants to demonstrate financial need before receiving aid.

On the other hand, Mr. Turk said merit scholarships favour children coming from higher-income families, because those students can afford to spend more time on school and extracurricular activities because they don't have to work.

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In the face of those statistics, Franca Gucciardi, who was one of the first recipients of the Loran scholarship in 1990, is the exception, rather than the rule. Ms. Gucciardi said she was an Italian immigrant who came from a modest background and lived in a rough Toronto neighbourhood.

"I'm your Jane and Finch kid," she said, referring to the area where she grew up, which has a reputation for gang violence.

Ms. Gucciardi, the executive director of the Canadian Merit Scholarship Foundation and now part of the team that awards the Loran scholarships, said the selection process looks at more than grades, though there is a minimum average of 85 per cent.

She said volunteers review the backgrounds of the students and select winners based on the context of their income background. They also look for applicants with a strong moral character, a commitment to service and leadership potential.

Ms. Gucciardi bristled at the suggestion that merit scholarships only go to high-income students.

"I always resent this, because somehow it says that kids that come from certain backgrounds don't merit something on their own, and that is something you have to careful of," said Ms. Gucciardi.

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"I see kids coming from every single background and I equally see a level of commitment to service. It looks differently depending on who you are, but it's there and they merit it equally. We have to make sure talent, no matter where it comes from, is realized."

Alex Usher, the president of Higher Education Strategy Associates, which conducted the Ontario study, said a selection process that examines a range of criteria, not just marks, is the best way to bridge the income gap between scholarship applicants.

"That's the main way that you get rid of that problem: you spend less on grades and you spend more on much more contextual notions of merit," said Mr. Usher.

He agreed that scholarships guaranteeing students a set amount of cash if they meet a certain grade-point average are usually skewed in favour of the wealthy.

He repeated the argument that this type of aid, which has become a popular enrolment tool during the past 15 years, favours students who don't have to work and whose parents pay for tutoring.

Mr. Usher said university administrators implemented such awards because they believed if students were promised money upon delivering a grade, they'd be more inclined to stay enrolled in a school. As a result, about 66 per cent of first-year university students have a merit award, he said.

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"They can tie down people early with them, and they don't cost very much to administer," said Mr. Usher.

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