“We don’t qualify for need-based aid, what should we do?”
That’s a question too often asked by families worried about paying for college.
With college costs increasing faster than household incomes, there’s a greater need than ever for families to find sources of free money to help pay for college. In a recent survey by College Ave Student Loans, the majority of students (61%) found college costs to be more than they expected.
When students and parents first think of “free money” many turn towards private scholarships.
Although there are private scholarships that award money based solely on merit and without regard to any financial need, the largest source of “free money” comes directly from colleges themselves, in the form of institutional aid.
According to the College Board’s 2019 Trends In Student Aid Report, 26% of all student aid came from institutional grants, meaning aid offered by colleges. Compare that to only 7% that came from private and employer grants that offered private scholarships to students.
As the report confirms, colleges offer more “free money” than private scholarships from outside sources.
What does that mean? The largest source of “free money” a student is likely to receive is directly from the college they attend.
That’s why students should be very strategic in researching and finding schools that can offer them the most in merit scholarships.
Merit Scholarships and Tuition Discounting
What are merit scholarships?
As the name implies, a merit scholarship focuses on some form of a student’s merit and doesn’t take financial need into account.
Students may be rich or poor and still qualify for merit scholarships. More and more colleges and universities are giving merit scholarships to lure top students.
Depending on the scholarship, the college granting it could look at a combination of a student’s ACT or SAT test scores, academic performance, teacher recommendations or just one of these areas. Other scholarships might focus on a student’s dedication and performance in music or theater. Some are awarded based on location too.The one major thing about merit scholarships?
They don’t consider Expected Family Contribution (EFC) like need-based financial aid. Also, merit scholarships do not have to be re-paid regardless of the amount.
A student’s family can have no financial need and they could receive a merit scholarship that ranges from a few hundred dollars to thousands including covering most of the cost of college.
In some cases, students receiving merit scholarships can get a free college education for all four years. These types of merit scholarships are known as full tuition or full ride scholarships.
What is tuition discounting?
A college will often offset its published tuition price by offering money, known as institutional aid, to students.
Often, colleges charge more to indicate “quality.”
To lure good students, the college offers discounts and calls it merit aid. When a college fails to meet enrollment goals, they may offer more of these “discounts.”
A Merit Scholarship Success Story
When Lisa Ball’s son was a freshman in high school, she took him to a college fair.
College fairs are a smart idea because college admissions representatives host an event near a student’s home – sometimes at the high school – and students and parents can meet college staff one-on-one and ask questions.
At that college fair, Ball’s son saw charts correlating merit scholarship money with grades and test scores.
“This was very eye-opening for him and enough to turn his grades around because he realized that on my teacher salary, we were going to need that merit money,” Lisa said.
Her son was interested in wildlife biology, and his parents sent him to a wildlife biology camp after his sophomore year of high school to explore this path as a career.
“He came home telling me about a biology professor he met doing research in the mountains of New Mexico who just really inspired him,” Lisa said. “We looked him up and he was at a smallish state school we had not heard of, but this school is in an area with two incredible wildlife reserves. We visited and were so impressed with the research opportunities for undergrads and the warm and welcome feeling on campus.”
Lisa researched online and discovered a scholarship to the school that was only offered to out-of-state students. Her son qualified. He hit the target GPA and test scores results. That meant he qualified for a full tuition scholarship.
“And that awesome professor he met in the field is now his advisor,” Lisa said. “This school is not fancy or prestigious, but we know it is right for him and for our budget.”
Lisa’s son landed a campus job at the recreation center. He got to move in early, and Lisa and her family was able to enjoy all the family send-off activities.
“I would recommend that families who know they will need to rely on scholarships to communicate this information early to their students,” Lisa said. “Early college visits and college fair visits will help students understand that there is a payoff for good grades and high test scores. Our son toured a local state school his freshman year and we started visiting out-of-state schools his sophomore year. While some parents may think this places too much pressure on kids, there is great value in demystifying the whole college application process.”
Lisa said the scholarships her son received have made it feasible for their family to pay for her son’s undergraduate education without student loans.
He is also contributing because he worked throughout high school and saved that money for college.
How Does a Student Get a Merit Scholarship?
A good strategy for a student to receive a merit scholarship is to focus on colleges where a student’s grades, test scores and class rank place them in the top 25 percent academically.
Why is this important?
Because many college admissions officers look at their applicant pool and search for the strongest students, which are usually in the top quartile.
Colleges want good students to attend their schools and will pay students, in the form of merit scholarships, to do so even if they are rich and don’t need the help.
A college may offer a large merit scholarship to a student. The amount may seem impressive. But colleges do this because they have a high sticker price because of costly tuition.
A student shouldn’t put all their focus on one college.
High profile colleges tend to be extremely selective and more conservative when it comes to offering merit scholarships.
In fact, most schools that admit less than 25% of applicants focus their aid money to students based on financial need, rather than academic achievement.
By virtue of their “brand name” more selective colleges already receive too many applications from extremely well qualified students, so they have less need to “attract” top caliber students.
Students should explore lesser-known colleges. They may have a higher acceptance rate, and the competition for money may be easier.
Students may think out-of-state colleges are off-limit if they can’t afford them. But they should explore these opportunities. Check a college’s website to see if they offer merit scholarships or call the admissions office and ask.
Here’s something to note: Merit scholarships can be tricky.
More times than not, merit scholarships won’t cover the entire cost of college. When this happens, it’s called a tuition gap.
If a family is faced with a tuition gap and federal Direct Loans are still not enough to cover the gap, many families will look towards private lenders, like , to fund the gap.
College Ave Student Loans provides flexible options to find a loan that fits a family’s goals and budget. They also make It easy to find out what interest rate to expect on your loan by prequalifying a borrower or cosigner.
Merit Scholarships May Come with Ongoing Requirements
Colleges dole out merit money and may expect students to achieve certain GPA requirements to get the scholarship renewed.
Many freshmen – even those who were straight-A students in high school – often struggle to maintain the same kind of grades in college. If a scholarship requires a student to keep a 3.5 GPA and that student has a 3.4 GPA, they will lose their scholarship.
Many students then start switching classes to maintain their GPA and get off track in their area of study. They may even change majors to keep the scholarship. If students lose their scholarships, they may not be able to afford sophomore year at all.
A student who loses their scholarship or doesn’t have enough merit aid to cover all of their college education still has options and can turn to federal or private student loans to help
Students should always ask about and understand renewal terms before accepting a merit scholarship.
Merits scholarships are worth the homework
Merit scholarships take research, but they are worth it. That’s because, according to various surveys, merit scholarships account for a major portion of $46 billion available every year in scholarships from public and private colleges.
If merit scholarships seem overwhelming, Road2College offers its College Insights tool for guidance. With all the information you need in one tool, College Insights makes it easier to research colleges and find those that are most likely to offer your student merit scholarships.
With hard work and homework, merit scholarships can help cut college costs for you and your student.
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This article is sponsored by College Ave Student Loans. To fill in gaps after other aid is awarded, check out their private student loan rates and see how they compare to parent PLUS loans.