Why the financial aid conversation should happen early

Why the financial aid conversation should happen early

If you’re just beginning the college search and application process, the number of things to consider can seem overwhelming: Big school or small? Research university or liberal arts college? Urban or rural? Close to home or far away? As costs have skyrocketed over the past few years, however, college admissions have increasingly come to revolve around one major question: is it affordable? (more…)

The hidden costs of “full-tuition” scholarships

The New York Times Education Life section has published a very important article about some of the hidden costs of college. It focuses on the fees that schools tack on for everything from orientation to “student excellence,” and that families paying for college may not even be aware of until they get the bill.

Apparently, many of these charges used to be covered by tuition but in recent years have been increasingly shifted to the “fees” category, where they can no longer be covered by scholarship money. (more…)

Why you won’t get a full ride to Harvard on a National Merit Scholarship

After I posted a list of reasons that students should continue to consider passing up the new SAT in favor of the ACT, I received messages from a couple of readers who said that they shared my misgiving about the redesigned test, but that they had a very practical concern regarding that exam: namely, the PSAT and qualification for National Merit Scholarships.

In both cases, they indicated that their children would be dependent on scholarship money to attend college, and that they could not afford to pass up the opportunities offered by the National Merit program.

I confess that this was the last thing on my mind when I wrote the list, but it is a very real concern, and I appreciate having it called to my attention.

I do want to address the issue here, albeit with the caveat that I am not a financial aid expert, and that you should check with guidance counselors and individual colleges because policies and guidelines and vary from school to school.

I’m going to go into a lot more detail below, but in a nutshell: If you are unable to afford college without a full scholarship and are focusing on a group of less selective public universities, primarily in the (Mid)west and South, that offer large amounts of aid to students with high stats in order to boost their rankings, then yes, National Merit can count for a lot. But otherwise, it may have little to no effect on the amount of aid you ultimately receive.

If you are looking at highly selective schools, as many students aiming for National Merit are, you probably do not need to base your decision regarding SAT vs. ACT solely on the possibility of obtaining aid from that source.

Here’s why:

Approximately 1.5 million students take the PSAT each year. Of those students, the top approximately 1% in each state are automatically named National Merit Semifinalists by the National Merit Scholarship Corporation (NMSC).

Cutoffs are set by state and vary significantly; cutoffs in traditionally high-achieving states such as Massachusetts and New Jersey are substantially higher than cutoffs in traditionally low-achieving states such as Mississippi in New Mexico.

In total, around 16,000 students receive National Merit Semifinalist status. In order to become Finalists, they must be endorsed by their schools, fill out an application detailing grades and extracurricular activities, write an essay, and take the SAT to confirm their scores.

Most Semifinalists (about 15,000) advance to Finalist status, and of those students, around half will ultimately be named National Merit Scholars.

Although the designation of “National Merit Scholar” is considered an honor, the actual payoff in terms of reducing college costs varies enormously and depends on what type of institution a student wants to attend.

First, a few universities offer substantial scholarships to Semifinalists, so if students with that designation want to attend such a school and decide they do not want to take the SAT, they can obtain a substantial amount of money regardless. These schools include the University of Maine and the University of Southern Mississippi.

Most universities, however, require that students obtain Finalist status in order to be eligible for full-tuition scholarships. Some of them also have GPA requirements. Representative schools include the University of Alaska, the University of Arizona, the New Jersey Institute of Technology, and North Dakota State.

In addition, students who advance to Finalist status become eligible for corporate-sponsored National Merit Scholarships, which are open to children of employees of participating companies or, in some cases, residents of communities that those companies serve. About 1,000 corporate-backed scholarships are given out, ranging from $500 to $10,000 dollars. Some are one-time grants, while others are renewable for four years.

Finally, some schools, such as the University of Massachusetts-Amerhest, only offer full-tuition scholarships to students who have actually been named National Merit Scholars.

It is important to understand that it is an individual school’s choice to offer significant tuition discounts, full-ride or otherwise, to National Merit Scholars; the funds do not come from NMSC itself. In fact, actual National Merit Scholarships themselves are worth only $2,500.

It is also important to understand that although there are a number of prestigious universities that participate in National Merit, most of these schools offer fairly modest amounts of scholarship money on top of the actual National Merit scholarship. Usually, the amount is roughly comparable to the amount of the NM scholarship itself, with some schools offering a bit more (the University of Chicago offers a minimum of $4,000, for instance) and some a bit less. 

Although there are exceptions, the general rule is that the more prestigious the college, the fewer NM scholarships are offered, and the smaller the amount of those grants. Conversely, the less prestigious the college, the more NM scholarships are offered, and the higher the amount of those grants. 

The reason is that highly competitive schools such as Johns Hopkins, Vanderbilt, and Emory do not have a shortage of high-achieving applicants, and they can afford to allocate aid primarily based on need. Although they may offer full-tuition scholarships to students at the very top of their applicant pools (students for whom they are competing with Harvard, Yale, Stanford, etc.), they do not automatically hand out these scholarships to NMSC Finalists the same way lower-ranked state universities do. The Ivies do not offer institutional National Merit Scholarships, or indeed any merit scholarships whatsoever. 

Northwestern, for example, offers only $2,000 in additional aid, bringing the total to a $4,500. The school makes clear that students who receive corporate-sponsored National Merit Scholarships cannot also receive university-sponsored National Merit Scholarships, limiting the amount of NM aid a student can receive.

You should also be aware that elite schools have recently been reducing the number of National Merit scholars they support, in some cases from well over 100 to no more than a few dozen. So while certain elite schools may enroll large numbers of National Merit Scholars, those students are not necessarily being supported financially by the schools themselves — either that, or they are only receiving trivial amounts of merit aid relative to the cost of attendance. 

Likewise, a number of well-known universities, including the University of Texas-Austin and New York University, and the the Universities of Michigan and Virginia, have withdrawn from participation entirely, although they may still offer their own merit programs.

The other, exceedingly important point to be aware of is that merit aid virtually always replaces need-based aid; it does not supplement it.

Middlebury College, which admits students on a need-blind basis and does not offer merit scholarships, summarizes this policy clearly:

Middlebury College allows outside scholarships, such as local scholarships, high school awards, subsidies from parents’ employers or National Merit funds, to first replace the self-help (work and loan) component of the financial aid award. Any outside scholarship aid exceeding the self-help will then reduce Middlebury grant aid dollar for dollar. Outside aid cannot be used to reduce or replace your Family Contribution (EFC).

Even at a school that does offer matching NMSC grants, such at the University of Chicago, you can assume that the same will be true. If a student receives $7,500/year through a combination of $2500 from the NMSC and $5,000 from the school, that $7,500 will be used to reduce the size of any need-based grants the student is awarded; it will not be awarded on top of those need-based grants. The EFC will remain unchanged.

Obviously, at elite private institutions, merit aid policies tend to be most beneficial to well-off students who can almost afford sticker price, but who aren’t going to turn down an extra $5-10K.

Students from families who make too much money to receive significant need-based merit aid at elite private colleges, and who don’t qualify for one of the very few full-ride (non-NMSC) merit scholarships some of those institutions, may be unable to fill the gap through NMSC alone.

So the bottom line is as follows:

If you are a high-achieving student who is not necessarily aiming for elite schools, and whose ability to attend college is entirely dependent on your ability to secure a full scholarship, then yes, you should probably take the PSAT seriously, regardless of how ill-managed the rollout of the new SAT has been. If money is that serious a concern, you are best off pursuing every opportunity open to you, and you may discover ones you did not even know about.

That said, if you are a stellar test-taker and are committed to taking the ACT, it is unlikely that you will suffer too much. The vast majority of the universities that offer significant scholarships to NMS Finalists, also offer equally substantial aid to students who achieve high scores on the ACT. If you see that one of your target schools offers automatic merit scholarships for NM qualifiers but does not mention the ACT, call the financial aid office and ask about what sort of merit aid is available for ACT-takers. Colleges do not always put every piece of information on their websites. 

If you are a high-achieving but very needy student, you should also be aware that you may in fact be eligible for a free ride at some elite schools. It is true that the wealthiest colleges do not offer merit scholarships, but the flip side is that they can afford to offer enormous amounts of aid to their poorest applicants. You shouldn’t count Harvard out entirely — just know that you won’t be attending on a National Merit Scholarship. 

If you fall into the “too-wealthy-for-need-based-aid-but-too-poor-for-sticker-price” category, the amount of effort you expend in pursuit of National Merit should depend on a number of factors: how much time you will have to spend studying for the PSAT (are you almost there, or do you need another 150 points?), and what the tradeoff is in terms of spending time studying for that test vs. doing other activities; what type of school you are aiming to attend (public vs. private), and what sort of other scholarship opportunities it offers; and just how much aid you will require to make paying for a particular college feasible. These are individual decisions, and they must be made on a case-by-case basis. 

Finally, if you are a high-achieving student for whom financial aid is not a significant concern, and you are aiming to attend the most prestigious college you can be admitted to, then you should not base the SAT vs. ACT decision on National Merit. The reality is that elite colleges receive so many applications from recognized students that this factor will carry very little weight. Your actual SAT or ACT scores and overall record of achievement, both in and outside the classroom, will be the deciding factors.