How Merit Aid Works

There’s quite a few different kinds of aid that help with lowering the cost of college. One of the most straightforward and beneficial is merit aid, which is most commonly offered by colleges as part of an admitted student’s award letter. Unlike need-based financial aid, merit aid is not awarded based on need but the merits of an individual student. There are some important basics to understand regarding merit aid, as it is often a very important piece of the puzzle to paying for and selecting a college.

What is merit aid?

Merit aid is a type of financial aid gifted to students by a college or university that does not need to be paid back. They are usually awarded to students who demonstrate a high level of achievement in specific areas. This is often academics, but can also be athletics or the arts, and colleges may also look at a student’s extracurricular involvement or community service to make their decision. For merit aid specific to academics, the higher your student’s grade and test scores, the more opportunities they will have for merit aid at various colleges. Merit aid offers can sometimes be negotiated with a college if it is just short of what you can afford, your student has increased their grades or GPA since applying, and the college is your student’s first choice.

While merit aid is definitely a benefit for students and their families, merit aid is also a benefit for the colleges. They use it as a recruitment technique, knowing that by offering merit aid, they can bring the best and brightest students to their school and dangle the carrot that is money. The great part about merit aid is that your income and finances have nothing to do with it. No matter what your financial situation is, your student can be considered for merit aid (assuming the college offers it).

Non-resident students (out-of-state) may receive a higher merit aid offer than resident (in-state) students due to the higher cost of tuition for non-resident students. This is also a tool used to attract non-resident students to their institution.

Students who have earned annual merit aid awards typically have certain requirements to keep the award. This may be a GPA requirement, and if the student’s GPA falls below that requirement at the end of a quarter or semester, they may be put on a probationary status (like a warning) or the aid may be taken away for future years. Students may also be required to enroll in a specific number of credits each semester. Some merit aid is nonrenewable, meaning it is only offered one time. When making the final selection of which college your student will attend, ensure you know if it is a one-time award or renewable for four years.

Those who are awarded merit aid don’t need to be straight-A students. While merit aid based on academics is the most common, a range of GPAs will qualify for merit aid. Each college is different, and I recommend that students do their research on schools that offer merit aid, how much merit aid they will offer, and what the qualifications are.

Not Every College Offers Merit Aid

Did you know some highly and ultra selective colleges don’t offer merit aid? As I mentioned, merit aid is often offered as a recruitment tool to lower the cost of that specific school and to encourage students to attend. It’s usually based on a student’s academic merit - specifically GPA and test scores - and higher awards are granted to higher grades. At an Ivy League college, for example, all students have high grades and test scores. They don’t have to convince any student to attend (they have plenty of applicants with less than a 15% admit rate). Besides the colleges who don’t offer merit aid at all, there are some who are pretty specific about who gets it and how much. Some colleges offer only a few thousand dollars to less than 10% of their students. It’s awful when students put colleges on their list, only to find out upon acceptance that they didn’t get any merit aid or didn’t get enough to make attendance at that particular school a reality. It is vital to…

Do Your Research

Prior to applying to colleges, if money is a factor in where your student goes to school, please ensure your student is applying to colleges where there won’t be any surprises. As an example, I work with my families’ budgets so students don’t have to turn down many offers strictly because of finances. Financial fit during the college search is real and is an important component of building a college list.

Other Sources to Receive Merit Aid Via Scholarships

I am pretty categorical in my thinking, so I think of institutional merit aid as separate from merit scholarships. However, there are some significant merit scholarships out there for students who meet the criteria. The National Merit Scholarship Program is one of them. They disbursed over $40 million in aid in 2020 and specifically work with students who earn a high score on their PSAT. Colleges think highly of this designation and often offer scholarships on top of anything students have earned through the National Merit Scholarship Program. Even being one of the 50,000 qualifying students is likely to earn a student some attention and aid based on this merit.

Combining Aid From Other Sources

It’s important to keep in mind that as students are earning multiple scholarships - merit aid from their selected college or university, a scholarship from a local organization, a scholarship from an essay writing contest, etc. - some colleges limit how this award money can be stacked. It really varies by school, so I recommend to be in touch with the financial aid offices of your student’s final list of schools before making a decision if money is a significant factor.