CLINTON, New York

Hamilton College said Thursday it will stop offering merit scholarships to incoming students in 2008 and use the money instead to provide more need-based assistance to low-and middle-income families.

The move won praise from educators who said they hope it will inspire other colleges to follow suit.

The decision by the small liberal arts college would affect only a few dozen students. But it comes at a time when colleges have been criticized for using their resources to lure high-achieving students -- many of whom don’t need the money to attend college _ thereby improving a school’s academic standing at the expense of its economic diversity.

“This is a true act of leadership ... and hopefully it will begin to restore the system to a more sensible one,” said Barmak Nassirian, associate executive director of the American Association of College Registrars and Admissions Officers.

Hamilton, a 195-year-old liberal arts college in upstate New York with about 1,800 students, has awarded a limited number of merit scholarships since 1997. On average, 15 to 20 students out of a first-year class of 470 have received merit scholarships of up to half tuition.

Approximately 5 percent of Hamilton’s $21 million financial aid budget is spent on merit aid, according to Monica Inzer, dean of admission and financial aid. The new policy will reallocate about $1 million each year for additional need-based aid, she said.

Inzer said demographers predict a college student population with greater financial need in the coming decade, and colleges and universities must prepare for that reality.

Currently, more than half of all Hamilton students receive need-based financial aid. The average financial aid package (grant, work-study, loan) for those students exceeds $26,000, Inzer said. It costs $43,890 a year to attend Hamilton.

“Everyone is saying it would be great to slow this merit aid trend down, but no schools have been willing to do it,” said Sandy Baum, senior policy analyst for The College Board and professor of economics at Skidmore College.