If we have two offers from schools that are equally desirable and that have the same total aid and about the same total COA, is it better to accept the one that has a higher proportion of merit aid versus need? My thinking is that (assuming grades stay above level needed to keep aid) merit is better because it won’t go down if my income increases. The school that offers more need aid is a less sure bet financially (unless my income goes down which is unlikely). Here is an example (with no loans considered):
School A:
COA: $60000
Need Aid: $15000
Merit Aid: $10000
School B:
COA: $60000
Need Aid: $2000
Merit Aid: $23000
Am I thinking this through correctly? What else should I be considering?
I think it would depend on the threshold GPA (or other requirements) necessary to keep the merit aid, as well as the likelihood that there will be a change in your financial situation (income increase, inheritance, etc.). In considering the threshold GPA, I’d also be looking at my child’s major (some majors, like engineering, don’t lend themselves to super high GPAs), how strong a student the child is, and also whether there are probationary periods. Also, can you expect either merit or need based aid to increase when tuition increases.
I would be more comfortable with merit aid over need based grant. Merit aid is permanent (assuming GPA minimum is met), but need based aid could change.
Given the scenario in play by the OP, I think factors other than grant/merit aid are likely more important in the deciding which college to attend.
As long as the requirement for continued merit aid is reasonable to the student, I’d go with merit for the same reason you gave: just in case my income goes up if/when I decide to go from part-time to fulltime in my job.
One other consideration . . . if you decide to apply for any outside scholarships or awards during college, you’d actually be able to keep anything you win if you’re receiving primarily merit aid. Need-based aid, on the other hand, would likely be reduced - so you’d win $5k, and your need-based aid would be reduced by $5k. Just something to think about.
Is study abroad a possibility down the line? D received 2 offers that had the exact same net cost, but at one school, the terms of the substantial merit award stated that it could not be used for study abroad, something she very much wants to do.
While there are special scholarships for study abroad, not being able to take your FA with you adds a level of uncertainty and a lot more work to the study abroad preparations.
D preferred the other school anyway, but it was an important consideration. Study abroad already has added travel expenses and having to forego work study while abroad is another ding.
Just checked on GPA requirements and both schools (there are actually two offers with very good merit) only require 2.0. I think I might tell my kid it is at least a 3 :>)
I work part-time now but just agreed to increase my hours next year so I know my income will increase.
@cjpski Since the total aid is the same at both schools in the example, it may be that they have the same EFC and are just meeting it differently, so either college may increase the total grant award in the event of loss of income. Nothing guaranteed there for either school.
The parent here says their income is likely to increase because she has taken on addition work hours which will mean additional income, and therefore less need based aid…eventually.
Another thing to note…the 2017-2018 FAFSA will also be using the tax info from 2015…so the additional income from 2016 will not be noted on a FAFSA until 2018-2019.
Since the parent income will increase, I would suggest going with the merit offer.
Something that hasn’t been mentioned – an award with a higher proportion of need aid may adjust more favorably if the COA goes up over time. Some schools have seen big tuition increases.
My perspective on this comes from both of my twins being accepted to the same school that meets full need, but with different merit amounts. Between ED and RD tuition went up, so the ED package was adjusted.
@Pheebers That’s interesting. One school with the higher merit aid does NOT meet need, while the other does. The school that offered more need aid versus merit also meets need. I didn’t think about that angle. Thanks.
Think about the cost over 4 years, particularly if there are any siblings involved. If there currently is an older sibling that will graduate, the need based aid likely drops in the future.
If there is a younger sibling that will enter college themselves in a year or two, then the need based aid likely increases materially for future years (if it is a full-needs school).
Understood. But the gap between the old EFC and the new EFC is sometimes filled, unfortunately, with increased loans.
As such I would favor the school with the higher merit-based aid; need-based is not necessarily grants.
Get clarification on whether the merit aid is for 8 consecutive semesters or 8 total semesters. Get clarification on what happens if your kid gets mono or pneumonia early in the semester and withdraws… does that semester “count” in the tally? Get clarification on what happens if your kid does a semester abroad. Get clarification on what happens to the last two semesters of merit aid if your kid does a program (one of mine considered it) at the college where you can earn a BA and a Masters in five years… this particular college admitted students to the grad program after junior year… does the college then consider senior year the first year of grad school (no merit aid) or the final year of undergrad (same merit aid).
I’ve observed a LOT more gaming with merit aid. Need based aid is pretty straightforward if the Freshman year package is workable. Your kid isn’t going to lose the need based aid unless he/she flunks out or is asked to take a semester off due to sub-par academic performance. But many more games to be played with merit aid aka “Enrollment management techniques”.