Hey guys,
I’m new to this process, so I am sort of confused with Financial Aid. One of the questions I have is if you receive a merit scholarship, does that take into account with financial aid?
For example: Using a net price calculator, my COA would be 26,000. If I receive a merit scholarship, does it affect the amount of Financial Aid I get?
Thanks
The short answer is “yes”. Merit awards reduce your need. If your expected contribution to a school is $26K, and you get $20K in merit money, your need would be reduced so that your expected contribution will still be $26K but the $20K would probably cancel out any aid.
But in reality, few school meet full need, and none do as defined by the FAFSA EFC. How a school would apply the $20K merit award differs widely. For many schools that do guarantee to meet full need, that merit award MIGHT, not HAVE TO, but MIGHT reduce the loan and work study components of your aid package before reducing any grant amounts. For some school, it reduces a grant immediately, and you get exactly the same as you would have without the merit award. It’s just money coming from a different pot, and is subject to conditions other than financial need in future years.
Under federal law, you have to pay your FAFSA EFC before you get any federal money including loan subsidies and work study. So if the merit award reduces your need to the point that it pays your EFC, you don’t get federal aid other than the unsubidized loans. Pell grants are exempt. COlleges make their own policies about their own money. So getting an in house merit award, unless it exceeds the financial aid amount, may result in no extra money at all.
Probably yes, but different colleges will do things differently. Also, don’t confuse the terms. There is one COA for each college, so that won’t change based on who is doing the NPC. The result of the NPC will be an expected family contribution, or EFC. That will change based on who is completing the NPC and what kind of data is entered. COA - EFC = need. Most colleges will say that if you get a merit scholarship, your need decreases, and therefore your EFC will increase because COA is constant. They expect that the merit scholarship will be used to help pay college costs.
Saying EFC increases may be confusing. Essentially COA - EFC = need becomes COA - merit amount - EFC = need. EFC is a need-based term and from a need-based aid perspective, EFC stays the same but yes, at most schools merit aid won’t reduce EFC unless the award is larger than the original need. But as has been stated there is a difference in how different schools handle this, some taking away loans and/or work study before grants, some reducing grants right away.