Good afternoon. I realize every school is probably different, but in general I’m trying to get a handle on how Merit Scholarships play into other need based financial aid offered. From reading through some other threads it appears that if a Merit Scholarship is not full-ride it might likely actually reduce your need-based aid rather than reduce your out-of-pocket expense. Is this generally how it works? That, for example, if FAFSA app says a student can afford $20,000 of a $60,000 COA school (which advertises “no student graduates with dept”), and that student earns a half-tuition $24,000 merit scholarship, then the school will probably subtract the merit scholarship to bring the students COA down to $36,000, then provide $16,000 in need-based-aid, and the student is still responsible for $20,000?
Thanks in advance! If there’s a similar thread covering this already, definitely feel free to link me to that rather then duplicating an existing discussion
Yes, merit money can cut into financial aid. It does depend upon the school and the types of aid as to how and how much.
Scholarships generally are used to reduce need, so when you get a merit/need package all from a college, they’ve usually done all of the reductions. Rare to get more than your need, but it can happen if the merit exceeds it or if the college does allow stacking. Some things one cannot stack. You cannot get subsidized loans, for instance, if your need is fulfilled by grants, even if some are scholarships.
Often schools have a standard aid package formula and when merit scholarships enter the picture, they are used to first reduce the subsidized loan portion, The work study part of the package. Though PELL grants are stackable, many colleges do not permit their own funds to exceed Cost of Attendance.
Where most people see how scholarships reduce aid is when they get outside or late awards, that then are set against the financial aid awards. Yes, it hurts when that happens. Financial aid at many schools is distributed purely for need so any windfall a student gets elsewhere can directly reduce it.
It does very by school, but I would assume that it works the way you described it until proven otherwise. I believe that someone tried starting a thread a few weeks ago that had by school criteria.
Yes, your math is correct. Since need-based scholarships are based on how much your family will need to pay, they will usually subtract any merit money from that amount. So if COA is $50,000, and your EFC is $20,000, that means that they assume that you can afford $20,000. If you get $15,000 as a merit scholarship, they assume that you can now afford $35,000.
Another note - run the Net Price Calculators for each of the schools on your list. FAFSA is really just to see if you qualify for federal student aid. Each school has their own formula for assessing need. There are posts here every year from parents and students who relied on the FAFSA number for assuming need based aid and were very unpleasantly surprised when they got their aid packages from colleges.
Note 1: scholarships from the college may be done differently.
Note 2: a college may calculate “need” and EFC differently from the FAFSA calculation, and may not “meet need”.
Since you may be unfamiliar with the terminology used in that post:
UN = unmet need
SL = student loan (federal direct loan)
SW = student work expectation or work study
SC = student contribution = SL + SW
IG = institutional grants (i.e. grants from the college)
PC = parent contribution expectation
Colleges commonly award need-based financial aid using this kind of procedure:
Calculate PC (or EFC). This may be by the FAFSA method, but is commonly by the college's own method (sometimes using supplemental forms like CSS Profile) for colleges with better financial aid.
"Need" is LP (list price cost of attendance) - PC.
Award some combination of IG (free money) + SL (federal direct loan up to $5,500) + SW (or work study, typically up to $3,000 to $5,000) up to the amount of "need".
If IG + SL + SW < "need", then UN (unmet need) = "need" - (IG + SL + SW).
"Net price" = LP - IG = UN + SL + SW + PC.
There are some adjustments to the above if the student receives government need-based grants (Pell grant or state grants that can be used at the college).
Basically, college policies that allow merit scholarships to replace more UN, SL, SW, and PC before IG are more favorable to the student. However, it appears uncommon to allow merit scholarships to replace PC before IG, although replacing UN, SL, and SW before IG seems reasonably common.
