Does Merit Aid Eliminate Need Based Aid?

Paying for College
1

<p>Okay, just when I thought I was starting to understand this whole financial aid maze, I am thrown another curve ball.</p>

<p>I was under the impression that need based aid could cover the amount beyond EFC, and then any merit scholarships would be on top of that award, and would decrease the EFC.</p>

<p>My niece received some merit offers, one in particular for $30,000 per year, prior to them ever submitting the FAFSA. I assumed that the university would meet their "need" and that this $30,000 would be additional, since it was awarded as a merit scholarship, as opposed to need aid with a fancy title.</p>

<p>At graduation I was vaguely discussing costs, not wanting to pry, and the Mom told me that all of the colleges ended costing approximately the same, including the colleges that have a no merit aid policy. Since they have occupations with pretty transparent salaries (around 150-200k???), I know their EFC has to be quite high. I didn't want to get too nosy, but from what I could gather she was implying that when merit aid is offered the college considers the "need" met so really it sounded as if the $30,000 turned out to be inconsequential.</p>

<p>Is this normally what I should expect? So true merit aid is only valuable when it gets to the point that it surpasses "need'? I am so glad I started looking into this 2 years in advance--I cannot image being hit with this in March of senior year!</p>

2

<p>Yes, you are right. Merit aid helps if there would be a very large EFC or if the merit aid covers more than the school’s financial aid would.</p>

<p>Merit aid is also usually grant money, and many schools package loans into the financial aid.</p>

<p>Merit aid usually requires specific criteria for continuance (minimum GPA) and FA can also vary from year to year.</p>

3

<p>Financial aid is given based on the following Premise:</p>

<p>Cost of attendance (tuition, room , board, books, misc. expenses) - EFC (expected family contribution from income assets) = demonstrated need.</p>

<p>For schools that only give demonstrated need, it is the school that determines the need and how the need will will be met</p>

<p>You have "super aid " schools HYP with their HUGE endowments, where a family making between 150-200k may be eligible for need based aid. Although they offer no merit $, only need based aid, their need based financial aid is referred to as scholaships by the financial aid office. (this is why you may hear a story about little Egbert, receiving a $30,000 scholarship to Harvard and thinking that egbert is so smart that havard gave him $ to attend. The reality is that Egbert, had a financial need and Harvard meets the financial need for any and all students it accepts who have a financial need).</p>

<p>Since most schools have no where near the endowment the size of these 3 schools, you have many schools that only give need based aid where a family making 150-200k may receive very little or no need based aid.</p>

<p>Merit $$ is a different story.</p>

<p>You have some schools that give and make available merit $$ regardless of income (sometimes this is called discounting). </p>

<p>The best scenario of this would be a family that is eligible for very little/no need based aid according to the FAFSA/CSS Profile/ School’s own financial aid forms. Price tag of the school is $50,000. </p>

<p>Student receives merit scholarship of $30k, bringing the net price down to 20 k, thus giving the family a 60% discount.</p>

<p>There are also schools that have a need based component to merit $$. This means a student probably must have a financial need in order to get the $$ merit (these schools may ask the family to file the FAFSA/CSS Profile/School financial aid forms.</p>

<p>This family has an EFC of $25000. The school in question has a COA of $55,000. The student will need $30k to make this school doable. </p>

<p>Student receives a merit scholarship for $30,000. Student most likely will not receive any additional need based aid, because the $30,000 financial need has been met with the merit scholarship.</p>

<p>Lets say this family instead of having a 30k EFC has a 20k EFC at a school that cost $55k/year.</p>

<p>they will have $35k in need. Student receives 30k scholarship leaving 5k in need. this 5k in need will probably be met using a stafford loan/ college work study. Depending on the school’s policy, if student receives and outside scholarship (from the local Joe and Willie Club) for $5000, this $5000 can probably be applied to the self help portion of the financial aid package ($5k in loans and work study). In order for the Family’s part (EFC) to be met, student will most likely have to receive outside scholarship that covers more than the student need.</p>

<p>Keep in mind that all scholarship monies over the cost of tuition and books is taxable income to the student.</p>

4

<p>Yes it can. Your “need” is a set number, and it’s never determined by the family. When that need is met by a merit scholarship, there will be no more aid because you no longer have need.</p>

<p>There are very few instances where a family can get away with paying less than the EFC. If, for instance, a student earns a full tuition scholarship. Merit aid may then exceed need, and a student pays under the EFC. Also, a student may select a school with a cost of attendance under the family’s EFC.</p>

5

<p>I was under the impression that need based aid could cover the amount beyond EFC, and then any merit scholarships would be on top of that award, and would decrease the EFC.</p>

<p>No.</p>

<p>The only way to reduce EFC is to get such a huge merit award that it blows thru need, and then cuts into EFC.</p>

6

<p>Thanks for the responses. I guess I ASSUMED since she was awarded the $120,000 over 4 years prior to even applying to the school the it was a real honest to goodness merit GIFT that had nothing to do with need and thus would be on top of any need…I wonder if the parents know that the scholarships she was awarded at graduation which they were so pleased with may end up reducing their aid as well? Is there really any way to win at this FA game?</p>

7

<p>Is there really any way to win at this FA game?</p>

<p>Yes, if she applies to a school that will award her large merit for her stats, then she’ll get both awards. Since none of the awards are “need based”, then she gets everything unless the school scholarship specifically states some odd rule.</p>

<p>For instance, if she has the stats for a merit award from Bama for the amount of full tuition, then she’d get that, plus her other merit award.</p>

<p>Also, if a student qualifies for Pell, the student gets that no matter what.</p>

8

<p>My niece received some merit offers, one in particular for $30,000 per year, prior to them ever submitting the FAFSA. I assumed that the university would meet their “need” and that this $30,000 would be additional,</p>

<p>but, she no longer has as much “need” since she was given that award.</p>

9

<p>The simple explanation is that, for most scholarships at most schools, the total gift aid will be the larger of the scholarships or what the need-based grants would be (not both added together).</p>

<p>As always, there are exceptions, such as the Regents’ scholarships at Berkeley.</p>

10

<p>To answer your topic question, yes, it can. What merit money does is reduce the need. You only get financial aid if you have need. So if your need is $20K by college formula, and you get a merit award for $20K or more, you don’t have any need. If your need is $50K, then you still are eligible for $30K in need.</p>

<p>It gets a little more complicated than this when students get a financial aid package and then get outside scholarships. When the school itself is giving out the merit aid and it’s all being done as the financial aid package is being put together, a student has no idea what he would have gotten had he not gotten the merit package as all he sees is the final result with the merit integrated in there. When a student gets his financial aid package from a school, and then gets an outside scholarship, he can see exactly what the school does. </p>

<p>First of all, the federal money other than PELL has to go. No need, no money. So you lose the subsidies for the loans, and the Perkins loans which are subsidized. Most school will eliminate the self help first which are the loans and work study. So really the student is not losing much there as the DIrect loans still can be taken as long as the cost of the school is not exceeded, just on an unsubsidized basis, and the student can find a job to replace the work study and most schools have jobs for students that are not work study. But if the scholarship, exceeds those self help awards, they can cut into financial aid grants. SEOG, under law, has to be cut and some state programs with need based awards will require that those monies be returned if need is gone. What the school does with its own grants is up to the school policy. Some will let you keep the award–one of my sons’ colleges did. Some will let you do it for a year. Some will have a dollar for dollar formula. And some schools will take that outside award and place it against school aid first and keep the federal loans in place. You don’t nave the need, you don’t get their money. It’s all up to the school itself, as they can do what they want with their own money.</p>