Merit-based scholarships could be the most misunderstood aspect of college financial aid, based on the common misconceptions that:
Wrong on all counts!
The pool of money available for merit-based scholarships for college students is an estimated $22 billion deep and a lot of kids are swimming in it.
Merit-based scholarships are based on academic achievements or demonstrated talent in athletics, arts, music and other special interests. Most merit scholarships do not consider financial need.
One in four students going to public universities will receive merit aid from some source. Most of that will come from either the college itself or the state government.
The percentage of merit-based scholarship awards at private colleges is almost ridiculously high. A report by the National Association of College and University Business Officers (NACUBO) said that 87.9% of freshmen at private colleges received a grant from the institution in 2016-2017, covering 56.3% of tuition and fees.
NACUBO also said that 78.5% of all undergraduates at private schools received grant aid in 2016-17, covering 50.2% of tuition and fees. These grants do a lot to avoid piling up student debt.
Some of the recipients are athletes, some are musicians, some are rich, some are poor, some went to private high schools, some went to public schools and yes, some got straight-A’s!
The point is that a lot of people, representing virtually every segment of the college community, shared a lot of money that, in most cases, was renewable for up to four years, and didn’t have to be paid back.
High Achievement Is What Matters
Merit grants are a function of high achievement by motivated students. There are a lot of places outside the classroom where students can demonstrate the special skills or character traits that should be rewarded. Things like significant service to the community, leadership in civic organizations or active interest in a specialized area of math or science would qualify a student for a merit-based scholarship.
That is not to suggest that grades don’t matter. They do. More than half of merit scholarships (56.4%) go to A students, meaning those with a 3.5 GPA or better on an unweighted 4.0 scale. In fact, A students are twice as likely as B and C students to receive a scholarship. They have achieved and their achievement is rewarded.
Still, that means that 43.6% of the scholarships were claimed by people who weren’t A students in high school. Being captain of the swim team and an Eagle scout, while working a part-time job and maintaining a B average, could be enough to convince a college to offer financial aid.
Develop A Game Plan
College admissions is a competitive industry. Schools want students with better scores and better grades to elevate the school’s status. Some schools can attract students with tradition, others attract students with money.
Merit-based scholarships for students is a way to even the playing field among all colleges. If you have exceptional test scores or artistic talent, a lot of colleges want you, but there is a way to make yourself even more attractive. Apply to schools that you know you will be in the top 25% of applicants. Schools know they’re only going to enroll a small percentage of those “Top 25” so they will be more willing to bargain with you.
You have the leverage. If you get a better offer from a backup school, negotiate with your school of choice and see if they will match the offer. Important point: contact the admissions office about a matching offer, not the financial aid office.
Parents need a game plan as well. Your child’s college education is a huge investment. Research your options, and start saving early. Even if your child is exceptionally talented at something, they may only get a partial scholarship or enough grant money to cover 50-75% of the cost of a college education.
Putting aside money in a 529 qualified tuition plan or Coverdell education savings plan, could help them get through college without having to take on student loans.
Merit-Based Aid Growing Fast
Here are some of the important things to know about merit-based scholarships:
- Money for merit-based scholarships grew 64% between 2008 and 2012, the year the most recent data is available, according to the U.S. Department of Education. Money from private organizations grew by 130% during the same time. Coca-Cola, for example, gives a $20,000 grant to 150 high school students on a merit-basis.
- Most of the $22 billion in merit-based aid comes from colleges themselves. About $11 billion is awarded by schools; $4 billion comes from state government and another $7 billion coming from private sources like corporations, civic organizations and family trusts.
- Who gets a merit-based scholarship and how much they get is a decision usually made by a committee. It could be a university board, a group of business people, or just some family members who sponsor a law school scholarship at Dad’s alma mater. That instantly makes the decision subjective. They like certain things more than others. Do they like your accomplishments and activities more than someone else? Apply and find out.
- Some awards come with conditions, such as maintaining a certain grade point average while in college or participating in specific community service projects. In the case of merit-based awards from state governments, they usually require students to attend an in-state school.
- There usually are minimum academic requirements to apply, but the bar is considerably lower than you think. Most schools require only a 2.0 GPA from the student.
- The amount of merit aid varies wildly, depending on the organization or school and not every college offers them. Ivy League schools, for example, do not have merit-based awards. The same is true of some prestigious, small colleges. They offer scholarships on a need-only basis.
You Must Apply for Aid
The most unfortunate thing about merit-based grants is that some families eliminate the student’s chances by never applying for financial aid. There is some work involved, but it’s about the same as the application process for college and the reward for doing so could be enormous. Get a list of the scholarships and grants offered at the schools you’re considering and fill out as many applications as you can.
Merit-based scholarships range from $1,000 at state schools, to full rides at private schools worth as much as $35,000 a year, though most fall somewhere in between. There are websites detailing the awards at hundreds of schools. The average annual award is around $5,000.
There are plenty of misconceptions about merit-based aid. The fact is that merit-based scholarships are about rewarding students for a job well done regardless of their financial situation.