Merit aid cancels out need-based aid

<p>Thanks for the comments. I just wanted to say that we never expected the need based aid to exceed the COA. D received Perkins loan and Pell grant - our EFC is low. The strategy was to apply to LACs known for good financial aid where D would be in the top 25% of applicant pool in hopes that we would receive a good aid package. I didn’t expect this school to determine our net price of attendance to be $25,000 with $10,000 of self help. This is not NYU and research was done before applications were sent. It’s like the school decided not to give D any gift aid to meet our need since they had already awarded her a scholarship. D has received merit aid at 3 other schools ranging from $18,000 to $26,000. I’m just hoping that this isn’t a harbinger of the letters to come. </p>

<p>“If there is a secret, it might be that schools with limited financial aid love to offer their best scholarships to students they know will have substantial need. The effect on the school’s “books” is the same, and the parents can crow about scholarships and merit aid at the cocktail hour.”</p>

<p>A little offensive, D applied EA and was accepted before any financial information was sent to school. D was awarded their top academic scholarship on her merits, not because she is needy. This kid has worked hard, top stats that compare to other students here on CC, valedictorian, great EC’s and test scores. This was merit aid not need based aid.</p>

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<p>Well, yes and no. You need to look at the particular school. Some of them may not have as much discretion as the quoted comment suggests. Some of the public flagships, for example, seem to have raised a fair bit of money in the past for endowed scholarships with very particular qualifications set by the donor; some of those go to full-pays, some to students with demonstrated need. In some cases the school might wish it had more discretion to use those funds to support students with need, but that’s often not a college’s sole objective. Some are quite happy to use those funds to lure high-stats kids to attend, regardless of need. The most obvious examples would be schools like Alabama or Arizona State—or for that matter, USC on the private side–that offer big merit awards to National Merit Scholars on a need-blind basis. The irony is that the big merit award is probably most helpful to the kid with little or no need, because the high-need kid might do about as well financially at a school that meets 100% of need.</p>

<p>So here are a few examples of donor-restricted scholarships:</p>

<p>University of Michigan: Gloria Wille Bell & Carlos R. Bell Scholarship, $20K/year for entering freshmen studying engineering, math, physics, computer science or related scientific disciplines, who are residents of Virginia (with a preference for Gloucester, VA area); graduates of public, private, or parochial schools in the City of Chicago; graduates of New Trier High School in Winnetka, IL (a high-end suburban Chicago school district); graduates of the Illinois Math & Science Academy; or a resident of one of 20 specifically named Michigan counties (all in the southern tier of the state) with a preference for graduates of high schools in Ann Arbor (award at $10K/year for Michigan resident). OK, that’s a handsome merit award, but the criteria are quite specific. On the other hand, the criteria are sufficiently numerous and broad that the FA office will probably always be able to find qualified recipients. So who gets it will depend on how much the FA office is feeling pressure to stretch its need-based FA budget by dumping in merit aid to one or more recipients otherwise eligible for need-based aid, and (on the other hand) how much heat the FA office is getting from admissions to land a high-stats admit from Virginia, Chicago, New Trier, or the Illinois Math & Science Academy. To keep the donors happy, the FA office probably has to make sure a substantial percentage of these awards go to the Virginia and Illinois kids.</p>

<p>University of Wisconsin-Madison: Badger Flyers Scholarship, non-need-based merit award to a student studying either Dairy Chemistry or Dairy Manufacturing in the Department of Food Science at UW-Madison. OK, then. </p>

<p>University of Minnesota: Kentner Wilson Scholarship, covers full tuition and fees for a student from Miller, South Dakota in the College of Science & Engineering. ***?</p>

<p>Not a lot of discretion with some of these merit awards, and arguably even foolish for the schools to have locked themselves into merit scholarships so narrowly drawn. But the reality is, once these deals are made with the donors, the college or university doesn’t always have a lot of discretion as to who gets the award, and whether it goes to someone with need (and is therefore, .effectively, just a component of need-based aid), or to someone without need but who meets the donor’s narrowly drawn criteria.</p>

<p>Clinton, my comment was never meant to be universal. Perhaps, I could have added that my example applied mostly to schools that attempt to meet demonstrated need through grants. At such schools a merit aid represents little to nothing to a student who is to receive substantial need based aid.</p>

<p>This might not apply to schools that fall far short in meeting 100 percent of need, or offer mostly loans in their packages. Without looking it up, I might speculate that the schools you list in your examples are not meeting all need.</p>

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<p>^^ Yup. We have seen this happen. We are “full-pay”, which leads to what I have learned.</p>

<p>The phrase “full-pay” is thrown around on CC and assumes that a family is filthy rich and can actually afford the total cost of a school. There is no way we can pay the full price of an LAC. Those with substantial need have far more options than we do. Those students have a realistic shot of going to a dream school or at the very least, a school that is a great fit.</p>

<p>For “full-pay” families who are not actually able to pay in full, their children need to apply at schools way below their stats, and ONLY at schools that offer merit. Those perfect-fit schools without merit are immediately thrown off the table. Yes, these kids will be fine and will make the best of it wherever they go, but their shots at a dream school, in which they are in the middle to upper middle of stats, are slim to none.</p>

<p>Certain schools see a “full-pay” family, do a little jig and get out their “Accepted” stamp. But with no merit aid, it feels more like a rejection.</p>

<p>I know none of this a secret. But when it hits home, it hits hard.</p>

<p>Look at the most selective schools that offer significant merit aid. These include many that are just outside the USNWR top schools (starting with LACs like Davidson and Grinnell, or national universities like Rice and Brandeis… through Case Western, American, etc.) The average merit grants tend to run about $10K-$15K. Not much higher. I don’t think it’s coincidental that this brings the net cost roughly in range with the OOS cost to attend a typical public flagship (UC Boulder or Maryland … not Berkeley or UCLA). The less selective the school, typically, the less expensive the net cost (but also, the less generous the need-based aid.) Merit grants are incentive discounts, not rewards. The incentives are greater at schools that are farther down in the pecking order (up to a point of diminishing returns, as the money becomes less available).</p>

<p>A typical public flagship is priced at about the cost of an average new sedan (a Toyota or Honda), more or less. These prices don’t reflect the true annual cost of educating a student. They reflect the costs a reasonably thrifty middle class family can be expected to come up with somehow to educate a child if, say, it repeatedly delays buying that next new car another few years. </p>

<p>In other words, it’s pretty much all about market pricing, not philanthropy.</p>

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<p>It’s not a matter of foolishness, it’s a matter of respecting a donor’s wishes. Talk to anyone in fund-raising and they’ll say they very much prefer it when donors give unrestricted dollars. When fund-raising officers think they can persuade donors to allow funds to be disbursed according to what they consider the greatest need, they absolutely try to do so. They’ll also tell you that adhering to donor’s wishes is not only their legal obligation, it’s SOP for the fund-raising profession.</p>

<p>I can understand college dollars canceling each other out to a point, what gets me is when you bring in private scholarships unrelated to the school in any way that it lessens the SCHOOL’S burden, not the student’s, keeping in mind that the student did all the work to obtain those scholarships.</p>

<p>SteveMa, the fact is that schools only have so much money to give out, and many of their students have need that really isn’t being met. So when someone brings in an outside scholarship, it frees up money that can be used to help someone else.</p>

<p>Actually, in most cases outside scholarships lower the student’s burden by replacing loans first. What they don’t do in many or most cases is reduce the efc side of the equation so the up front, out of pocket cost per year doesn’t change unless the student really makes an unusual haul. This might be different at state schools, though, which don’t come close to meting need anyway. Grinnell does have a split formula for application of scholarship money - I don’t recall exactly the proportions - but it is applies to both “self help” in the aid package and I think some part of efc. I could have it mixed up, though - maybe applies to loans and student expected earnings. At any rate, it doesn’t all go directly to reducing loans.</p>

<p>Consolation-I realize that and that is why I said I understand that the college dollars cancel each other out. I still don’t agree that someone that put forth the time and effort to apply for those scholarships, many of which are available to other kids at that same college, should be penalized for that. The student that brings in a lot of private money also has needs and they met them by getting the private scholarships.</p>

<p>hutch, have you contacted the admissions and/or FA office yet?</p>

<p>And they will adjust. Freshman year my oldest son miraculously was awarded $1000 in work/study no other “aid”. I thought that was great and it would spare him the work of looking for an off campus job. After he had already left for college a small local scholarship of $750 was given to him (the check sent directly to the college) lo and behold the finaid office adjusted the paperwork and changed his work/study to $250. I couldn’t believe they’d do all that work for such a drop in the bucket for what amounted to a full pay student. I figured what’s a $1000 in the grand scheme of things. S hadn’t even had time to find an on campus job so it was moot but financial aid absolutely did all the paperwork to reduce “aid.” He never triggered the $250 of course and found an off campus job.</p>

<p>Unless it is a school that uses only grants and merit money to meet need, though, scholarships will reduce loans and student expected work contribution which does help the kid who brings them in. It means that they will be less in debt at the end. Agree that it is still a shock to the mental system because they usually don’t reduce the efc and make it easier to attend in the short term.</p>

<p>saintfan-If a kid needs $10,000 and get $5000 of aid in loans and they bring in $5000 in private scholarships, sure they still have to come up with $5000 to meet the rest of the costs. For a lot of kids that still means $5000 in loans, if they can get them from an outside source. Having that $5000 in the fed loans would mean they have that $5000 and the $5000 in outside scholarships. What if they can’t get $5000 in outside scholarships (keep in mind that those loans don’t have the same favorable repayment agreements or interest rates that the fed loans have). Reducing the loan package isn’t always a good thing.</p>

<p>Forgive me for being dense, but it’s not 100 percent clear to me what hutch14’s concern is. Did the school’s total aid package leave hutch14 with a net cost of attendance much higher than the EFC? In that case, it seems like a very good idea to contact the FA office, as sk8rmom suggests in post #31. Best of luck with subsequent packages!</p>

<p>For people wishing to cut into EFC, mom2collegekids’ post #12 gives a concise, straightforward “how-to” on that. </p>

<p>In my case, after merit was applied at the three schools my D is considering, our cost of attendance will be either a couple of thousand below or a couple of thousand above EFC. Funny how that worked out.</p>

<p>Steve - sorry about the confusion, I was working off the idea that the student wasn’t gapped. At times in the thread folks had talked about “full pay” students and reducing the need side of the package rather than efc side of the equation. I was not talking about (and said as much in a previous post) the state school or low aid school situation where COA might be 25k and aid consists only of the standard loan package. I was thinking about a situation where, for example, COA is 50k, EFC is 10k, scholarship 15k, regular federal loam amt., work study, remainder of calculated need met with institutional grants. If the student and family can’t come up with the 10k they are SOL, and outside scholarships will usually eliminate loans, work study etc. from the need side not the efc side. Yes, the family might be forced to take out more expensive less favorable loans to meet efc. I have been surprised by that myself. I only meant that one can’t say that reducing student obligation through loans and other self help on the need side does not help the student at all.
In my perfect world outside scholarships would go towards EFC first. However, in your scenario above, without the outside scholarship money the student would have federal loans and the parents would still have additional loans. The scholarship money reduced the total loans, just not in a way that’s optimal for students and families. Where the student would really get the shaft is if outside scholarships reduce institutional grants and not loans or EFC.</p>

<p>My experience with merit (by college), o/s scholarships has shown me that you have to ask each college how they will apply the o/s scholarship. D1 had merit (from the college - basically would have been covered by grants anyway) and o/s scholarship. The 8 schools she applied to had 5 different ways to apply the o/s scholarship. </p>

<p>D2 is awaiting decisions and has a $5k o/s scholarship. I have attempted to determine how each school will apply this $ in her FA package. For those schools that explain (clearly) how they apply o/s scholarships it varies widely. For those schools that are unclear on their websites - I can only guess. I am not full pay and am eligible for FA. I also have a Noncustodial situation. Some schools will apply the o/s up to FAFSA determined need (even if they use CSS) some will share the o/s 50/50 between grants/loans. Some apply the o/s to loans first and/or work study/student contribution.</p>

<p>D1 lost her WS in full when the o/s scholarship was applied - unfortunately that closed her out of some WS only research positions!</p>

<p>NEM - good to know on losing work study research possibilities.</p>

<p>*I can understand college dollars canceling each other out to a point, what gets me is when you bring in private scholarships unrelated to the school in any way that it lessens the SCHOOL’S burden, not the student’s, keeping in mind that the student did all the work to obtain those scholarships. *</p>

<p>This is what has been shocking to me - that outside scholarships can’t necessarily be used toward EFC. I anticipate that my D will have very high stats, but that my EFC will be very high. I’m divorced and I believe X either can’t or won’t contribute to college costs, yet his income will be “counted” against me and we will be squeezed. (I realize that not all schools will count his income, but some will.) The fact that a school wouldn’t allow an outside scholarship to reduce EFC is really discouraging.</p>

<p>Schools boast that they meet all demonstrated need of the student - what they aren’t saying is, your family is a different story.</p>

<p>Students (and families) spend many hours applying for “outside scholarships” (and yes it is time consuming for the student to write those additional essays). Those are $$$ that did not have to come from the school’s fundraising efforts. </p>

<p>I agree, how a family covers their EFC should not make any difference once the determination of need has been made. If the family has been resourceful enough to seek outside merit based scholarships, they should be allowed to apply those to their EFC. Seeing a family “bleed” to cover their EFC should not be part of the equation.</p>