Over a lifetime there’s a huge financial payoff for going to college, but how can students avoid taking out outsized student loans for their education in the short term? The key is to make your ‘out-of-pocket’ expenses as low as possible. You can do this by putting strong merit aid colleges on your list. Applying to colleges that are likely to give you merit aid is one of the best ways to make ‘financial fit’ choices and save thousands of dollars a year. 

The largest pool of non-loan money available directly from colleges is merit aid scholarships. Colleges award over $8 billion dollars in merit scholarships annually. Understanding how colleges award these scholarships requires a thoughtful strategy that can result in significant savings. Merit aid awards are mostly given to applicants who show academic excellence and are in the top 25% of a college’s most recently admitted freshman class. Since many colleges offer merit scholarships, you don’t need to have straight A’s or a 1600 SAT score to be awarded merit aid. Each school has its own top quartile stats. 

Merit aid grants are unlike other forms of aid in several ways. Federal government grants like Pell are primarily targeted at low-income families and are limited in size. Private scholarships are generally not renewable and require a separate application. And loans, of course, have to be repaid with interest. Merit aid, on the other hand, is not income dependent, doesn’t require a separate application, doesn’t have to be paid back and it’s renewable.

Finding  merit aid can be tricky and time-consuming. Using a college’s Common Data information will provide some information. You can find lists of colleges that give merit aid awards online, but those lists won’t show you if a particular college is likely to give you aid based on your profile. A new tool called MeritMore uses your stats to match you with  colleges most likely to give you aid and shows you how generous those colleges have been to students with similar profiles. You can check to see if your top schools are likely to offer you merit aid and then compare aid offers against each other. MeritMore also finds colleges generous with merit aid that match your criteria, but may not have been on your radar. This is a great strategy for finding financial fit gems.

The best way for families who don’t qualify for need-based aid to avoid paying sticker price is through merit aid. Awards can be in the thousands and tens of thousands of dollars per year. These scholarships help make college more financially accessible and help families avoid getting caught in the student loan trap.