Financial Aid: What Goes On, Really?
Updated: Sep 18, 2019
Of all the most frequently asked questions about college admissions, financial aid probably comes up most often. Inquiries typically start with the basics, such as “what is the difference between merit and need-based aid?” The quick answer is that merit aid, or scholarships, are dollars donated by people who are either very wealthy or very dead and are designed to entice students from the top tier of the applicant pool, regardless of financial need. Need-based aid generally refers to the government grants and loans allocated through FAFSA, as well as other sources, that are determined by the student’s ability to pay.
Financial-aid questions quickly escalate to murkier turf where definitive answers are scarce. One question we hear on almost a daily basis is whether applying early decision effectively closes the door on getting any merit aid. The answer would seem obvious, since why would a school throw money at a student who is legally bound to attend, scholarship or not? However, the real answer depends on which school you ask. We heard an unexpected perspective at a roundtable discussion among four vice presidents of enrollment during the recent IECA conference in Chicago.
Without naming names, some schools say that, contrary to popular belief, early-decision students are indeed sometimes awarded scholarships. The reasoning is that if a school were to gain a reputation for denying early-decision students merit aid, it would depress the number of quality applicants and the school would miss out on some really great kids. This does make some sense, although a healthy dose of skepticism is also understandable. It’s not so much that these schools are making false claims as it is that the policy almost certainly varies from school to school. So, if merit aid is a consideration, it would be worth researching a school’s position on merit aid before submitting an early-decision application.
A somewhat related question is whether students who are not declaring an intention to apply for need-based financial aid are unlikely to be awarded merit scholarships. Why give money to students who don’t need it? Once again, the intuitive answer may not be correct. One of the enrollment VPs said that providing scholarships to wealthy students actually makes more need-based money available to those less well-off.
Part of the reason is that tuition increases each year, but the scholarship award does not, and overall revenues rise accordingly. So, in a way, these students help support revenue growth. In addition, similar to the early-decision scenario, schools may view the potential scholarship as an incentive to apply even to students who don’t need the money. After all, scholarships are an honor, and not necessarily just about the money. Awarding merit aid makes a student feel wanted, which is a big deal. Once again, some schools are also wary of doing anything that might discourage high-quality applicants.
All of this is to say that navigating the financial aspects of a college application is complicated, and it is best to research, ask questions, and never assume anything. That much you can take to the bank.