An Open Question regarding Merit- and Need-based

Paying for College
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<p>Assuming that Merit-based is a one-off application where you do not reapply each year (but instead must meet a set GPA to continue receiving the scholarship), and assuming that Need-based is a variant amount depending on your (re)application each year, </p>

<p>How is it ever in a school's interests to give you merit aid (unless you do not apply for financial aid at all)? Note that I am not including non-school merit aid like national scholarships and the like. Now assuming you meet full-need but are also very smart: If a school wants to give you say $x of aid, and has $1000000 in aid "endowment", wouldn't they give your aid wholly in terms of financial need, not merit-based, because then they have a chance of giving you <em>less</em> the year after (in case you become richer) as opposed to a fixed merit-based award?</p>

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<p>The purpose of merit aid is to attract students that may not normally consider your school.</p>

<p>Also, most/many schools that give good merit scholarships do not give great aid any way.</p>

<p>Merit aid is usually funded differently…It’s often funded by donors who specifically want certain students at the school…such as high stats students, URMs, certain majors, etc.</p>

<p>For instance…my kids’ school gives big merit for stats. Last fall, there were nearly 500 freshman who had full tuition scholarships based on high stats. It also had 107 NMF freshmen with nearly full-rides. The school started doing this several years ago when it saw that high stats students were going elsewhere. It went to big donors and got these big scholarships funded. By doing this, the school has jumped many spots in USNews ranking. It also has been able to attract and hire profs that otherwise wouldn’t have considered the school. Many of the best profs like teaching higher stats students.</p>

<p>So…when schools give merit, it’s an investment. They aren’t being “charitable”…they are buying the best and brightest. The return on the investment is…higher rankings, a higher stats student body, being able to attract better profs…and yes…bringing in even MORE donor money when donors see that good things are happening at that school.</p>

<p>In many cases…big merit recipients wouldn’t have qualified for much - if any - aid anyway. The highest stats students tend to come from upper-middle class and beyond families anyway. (not always, but generally.)</p>

3

<p>What about a school that has both merit and need-based aid (being awarded together in one financial package with a letter of admission)? In that case, wouldn’t they give you more financial aid because they might save money in the subsequent years?</p>

<p>…mind you, if it’s an ED program like mine, the binding nature of it probably would make them only give out fin.aid … because I’d have to attend even if I got no merit scholarship.</p>

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<p>I agree with M2K that schools often use the merit to attract a student they really want. My D1 got a merit award within financial aid package at a number of schools she applied to. Most of these were meet full need and limited the loans by awarding the most they could in merit (top merit they had available). One school was a meet full need with no loans so the merit portion really made no numerical difference (except the additional NMF merit reduced work study) but was used by the school to entice the student and show how much they wanted her to attend. I wonder if a student lost the merit (due to grades) if the financial aid would be increased since it is a full need/no loan school? We do not want to be the guinea pig on that one! But it would be an interesting situation. At one school we did not apply for FA at all and got the largest merit there (full tuition).</p>

5

<p>What about a school that has both merit and need-based aid (being awarded together in one financial package with a letter of admission)? In that case, wouldn’t they give you more financial aid because they might save money in the subsequent years?</p>

<p>NO.</p>

<p>Again…merit money usually comes from another fund (often from donors), so it’s going to get spent anyway on somebody. The donors give the money for a purpose…such as to attract higher stats students or students for a particular major. There is a specific goal in mind.</p>

<p>And…more importantly…most schools have VERY LIMITED aid, so schools LOVE to be able to put a merit scholarship in an FA package because it frees up their aid money for another student. </p>

<p>Remember…only the top schools have a lot of FA to give and many of them don’t do merit. So, most schools only have limited FA, so merit helps them to be able to have more FA to give. </p>

<p>Which schools do you think have institutional FA to give and also gives out a good number of big scholarships AND meet need? I can think of USC and a couple of others, but there aren’t many. </p>

<p>Most schools who give out merit, don’t give big awards anyway, so if the student’s income were to increase substantially (not a common occurrence), then it may not make a difference because the school didn’t meet need ANYWAY.</p>

<p>For example…</p>

<p>School A …COA = $50k per year</p>

<p>Student EFC = $15k
Need = $35k</p>

<p>FA package includes $12k in merit, $5500 in loans, $2500 in work study. Award = $20k. Student is left with a $15k gap. So, even if the family income did jump, it would unlikely jump high enough to cause an EFC big enough that the merit would no longer be needed.</p>

<p>Now, if the student’s EFC is high, then the school is using merit to “buy” the high-stats student who could afford to go elsewhere. </p>

<p>Many billions of dollars of merit are awarded each year. If it were “cheaper” for these schools to achieve the same goals by using just need-based aid, they would be doing it. As a matter of fact, the wide-spread use of merit is a rather new thing. The practice became popular because schools saw that it works.</p>

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<p>Yesterday I called the financial aid office at a school my daughter is considering because I had a complicated question concerning assessing the value of assets for need-based aid. The person who answered the phone passed me along to someone more experienced. After asking my need-based-aid question, I asked a fairly general merit scholarship question. The financial aid person replied, “I wouldn’t know anything about that. The admissions office handles all the merit scholarships.”</p>

<p>That leads me to believe that Mom2collegekids and NewEnglandMother are right; essentially, merit aid is seen as an investment and viewed differently from need based aid by the financial aid offices.</p>

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<p>The top ranked schools do not give merit aid, as they know they can attract the best without having to spread inducers. So to them it is cheaper to just need based aid, as some parents will pay what ever it takes for the child to have a ivy league degree. However institutions that have not made it into the top 10 or 15 but to move up the ranks from where they are will give you aid if you are on top of their list.</p>

<p>The best example of this as an investment is Carnegie Mellon. They will not give merit aid normally, but if you get into a top ranked institution, they will work with you to give you aid.</p>

<p>[Admission</a> > Principles and Practices](<a href=“Home - Computing Services - Office of the CIO - Carnegie Mellon University”>Home - Computing Services - Office of the CIO - Carnegie Mellon University)</p>

<p>Practices
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We have been open about our willingness to review financial awards to compete with certain private institutions for students admitted under the regular decision plan. Unlike most institutions, the university states these principles openly to those offered first-year admission under the regular decision plan. While early decision students are not eligible to participate in this aid review process, we will meet their full demonstrated need as calculated by the university.</p>

<p>We use statistical modeling as an aid in the distribution of limited financial aid dollars. It is a strategic tool that helps us pursue our goal of increasing the quality of the student body while using our resources as effectively as possible. This modeling takes into account a student’s intended college major, academic and artistic talents, non-academic talents and abilities, as well as financial need. This approach to awarding financial aid is unique to Carnegie Mellon and has not been developed with the aid of any outside consultants. *</p>

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<p>Many oftentimes, students who could have gotten into the Ivies but could not afford it often end up attending lower ranking schools (not low-ranked schools, but schools just a notch below Ivy Leagues in prestige and rankings) SUCH AS – UVA, Amherst, NYU or Villanova and are potentially at risk of enjoying large merit aid packages from those such schools from which such packages are possibly there to be availed of. Its definitely worth a consideration for kiddos with high stats but soggy pocketbooks and an aversion to summer jobs!</p>

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<p>I don’t think Amherst gives merit. </p>

<p>As for NYU or UVA…since only a small number get big merit scholarships from these schools, a student would have to have ivy-like stats within the top 5% of the school to have a good chance at substantial merit - if big merit is needed to afford the school. </p>

<p>A scholarship of say $20k/yr may not be enough if you don’t have the means to pay the balance.</p>

<p>Often for merit that covers most costs, students need to look schools that are ranked below 70 or so…</p>

<p>*However institutions that have not made it into the top 10 or 15 but to move up the ranks from where they are will give you aid if you are on top of their list.</p>

<p>The best example of this as an investment is Carnegie Mellon. They will not give merit aid normally, but if you get into a top ranked institution, they will work with you to give you aid.*</p>

<p>I’m not sure about CMU or schools that are ranked just below the top 15. Those schools aren’t usually generous with merit either. However, maybe to get a student without need who would likely be accepted to any ivy, they would offer some merit.</p>

<p>*That leads me to believe that Mom2collegekids and NewEnglandMother are right; essentially, merit aid is seen as an investment and viewed differently from need based aid by the financial aid offices. *</p>

<p>Exactly…merit scholarships are an investment. The student’s stats are helping the school in some way.</p>

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<p>It can easily go the other way. The school might have to pay out MORE in need-based aid if the student’s family’s financial circumstances change. Lately, that’s unfortunately been pretty common. </p>

<p>Bedouin, were you referring to Amherst (the LAC) or UMass-Amherst? The LAC is certainly of the same tippy-top caliber as the Ivies, both with respect to academics and selectivity.</p>