As the cost of higher education continues to rise, pursuing financial aid has become a crucial aspect of the college application process for many students and their families. Merit aid, awarded based on a student’s achievements and abilities rather than financial need, can significantly alleviate the financial burden associated with attending college.
Both my children received merit-based aid because of their academic performance. The best path to this type of aid is to focus on academics. Start when your child enters high school by stressing the importance of a strong academic performance.
This week is FAFSA week. An entire week devoted to the FAFSA. Today, I am debunking some FAFSA myths.
As the week progresses, I’m going to scour the my blog, the web, and social media to find you the best information, tips and advice related to the FAFSA. If you’re not sure it’s worth your time, this advice should answer that question. If you want to be informed before you complete the form, this information will most definitely help.
Myth 1: If you can’t qualify for federal aid, there’s no point in filing out the FAFSA.
Reality: There’s more to the FAFSA than federal aid. Colleges use this form to disburse merit aid and grants. Also, if your student is considering a student loan or you are considering a Parent PLUS loan, you must complete the FAFSA. In addition, many states use your FAFSA data to determine your eligibility for their aid and many scholarships ask if you have completed the FAFSA.
Myth 2: I make too much money to qualify for financial aid.
Reality: There is no income cut-off to qualify for federal student aid. Many factors—such as the size of your family and your year in school—are taken into account. Your eligibility for financial aid is based on a number of factors and not just your income.
Myth 3: I have too many assets to qualify for aid.
Reality: Most colleges won’t care if you own a house and won’t count home equity against you if you do. The majority of schools rely on the federal aid application, FAFSA, which doesn’t ask parents if they own a home. If the college requires the CSS Profile, home equity is required, but because of the equity cap, has little impact on the award decision. In addition, money in qualified retirement plans, such as a 401(k), 403(b), IRA, pension, SEP, SIMPLE, Keogh and certain annuities, is not reported as an asset on the FAFSA.
Myth 4: I didn’t qualify for financial aid last year, so filling out the FAFSA form again is just a waste of time.
Reality: It’s super important to fill out a FAFSA form every year you’re in college. Why? Because things can change. For instance, your school or state might create a new grant or scholarship, or the factors used to calculate your aid could change from one year to the next. Either way, if you don’t submit a new FAFSA form, you’re out of luck.
Myth 5: The form is too complicated and since I’m sure I won’t qualify, it’s a waste of my time.
Reality: The FAFSA is actually pretty straightforward and can be completed in one sitting; and filing out the FAFSA is never a waste of your time. Colleges and states use this information when awarding grants and scholarships. (See Myth 1)
The bottom line: there is no excuse to not complete the FAFSA. It’s free and is well worth your time. Even if you can afford to pay for the entire cost of college, you should complete the FAFSA. Colleges use this data when dispersing merit aid as well.
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.
This post is sponsored and written in partnership with the College Board.
With college tuition high, families are searching for ways to pay for their teenager’s college education. The SAT can connect your teen to scholarships and merit aid that can make his or her dream university more affordable. Many colleges use a student’s SAT score to award merit aid, with many automatic scholarships based on a student’s score.
SAT Suite of Assessments
The SAT Suite of Assessments connects your son or daughter to colleges and scholarship programs that recognize academic achievement and award scholarships based on that achievement. Students who take the SAT can opt in to what the College Board calls the “Student Search Service” to make their names and information available to colleges and scholarship programs.
In addition to providing information to colleges, the College Board has increased access to millions in combined awards through the PSAT/NMSQT for low-income and minority students through partnerships with scholarship providers like the American Indian Graduate Center and the Hispanic Scholarship Fund.
College merit aid
Colleges provide merit aid to students who excel academically, including those who score well on the SAT. The specific requirements of these scholarships will vary from college to college. Your teen can make the most of his or her SAT score by finding guaranteed SAT scholarships—scholarships awarded based on the SAT score. Colleges often use other criteria like GPA and class rank combined with the SAT score to determine these awards.
For these scholarships, your teen may not be required to submit any extra application information, but in some cases, he or she will have to apply by a certain deadline to be guaranteed the scholarship. Your teen should check each individual college website for the full information.
For example, Colorado State University offers an automatic $4000 scholarship per year to a student who scores 1490 or higher on the SAT with a 4.0 GPA. Students attending Texas Tech University with an SAT score of 1400 or higher, a 3.5 GPA and in the top 10% of their class receive $6000 for up to four years with a one-time award of $4000.
Colleges look for students who will succeed in a rigorous college academic environment. Typically, students who earn high SAT scores demonstrate that ability. Coupled with a strong GPA and other application criteria, SAT scores help colleges ascertain a student’s ability to do well in college. Colleges award these students by providing them with merit aid scholarships.
Note: Don’t forget the regular registration deadline for the March SAT is February 9th. Register now at the Official SAT Registration website. And, there’s still time for your student to study for the upcoming March SAT by using Khan Academy’s FREE SAT prep.
Financial aid is always on the minds of parents and students, especially when they begin to research college costs and their financial aid statistics. The terms can be a bit confusing and today I want to discuss merit aid and answer a few questions about what it is, how do you find it, and how do you apply for it.
What is merit aid?
“Merit Aid” is the general term for grants, scholarships and discounts that a college awards in the financial aid package without considering financial need. Merit aid is based on several factors: academics, athletics, special talents such as music, where the student lives or other demographic characteristics. Merit aid is different from need-based aid which is awarded based on the student’s economic situation.
How do you find merit aid?
There is more than $13 billion of merit aid available to undergraduate students. Most of that, about $11 billion, comes directly from colleges. The other $2 billion is provided by state governments. MeritAid.com lists more than 23,000 individual merit aid scholarship programs offered by more than 1,800 colleges across the country. Meritaid.com is the largest single source of information about merit-based scholarships.
You can also search on the college’s website. Colleges with merit aid may offer anywhere from a few dozen opportunities to hundreds of individual programs. Some merit awards are well known and heavily advertised while others are harder to find.
How do you apply for merit aid?
In many cases, applying to a school is enough to be considered for the many merit aid opportunities available, assuming you get in, of course. However, some colleges or scholarship programs may have special application requirements, so always check with the college if you’re not sure.
When will I know if I receive merit aid?
Once the college offers you admission, they will follow the offer with a financial aid package. The merit aid they award will be listed in the package. This offer typically comes after the acceptance letter arrives.
Almost everyone qualifies for some form of financial aid, but don’t assume you won’t qualify for merit aid. Check out MeritAid.com for a list of 5 myths about merit aid. Visit their website for the best database on merit aid scholarships.
The outlook isn’t good. Bain, which markets its consulting services to universities, and Sterling Partners, which invests in education companies, examined the balance sheets from 2006 to 2010 of schools in their report. They found many schools operating on the assumption that the more they build, spend and diversify the more they will prosper. They have become overleveraged, with long-term debt increasing at an average rate of about 12% a year and average annual interest expense growing at almost twice the rate of instruction-related expense.
Schools have been trying to plug the gap by jacking up tuition at rates that aren’t sustainable. The result is a fiscal hurdle that dozens of second- and third-tier public and private schools won’t be able to clear. Hundreds of schools—including some of the most prestigious institutions in the country—have tightened their belts.
It looks like the colleges are struggling, much like the students and families. Unfortunately, you know that the financial problems that colleges are experiencing will be passed along to the students by either tuition hikes or reductions in merit aid. That is not good for students and their families, especially the ones who make too much to quality for need-based aid.
What does that mean for this year’s crop of seniors? You better investigate the financial outlook of your college choices carefully and do some digging on their past merit-aid distributions over the last several years, especially if you are counting on that to pay for college.
