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More Merit Aid
More Merit Aid From Colleges
One of the most frustrating aspects of the college process for families is trying to figure out how much a given college will cost. In many cases, it’s like medical insurance: you don’t actually find out how much a procedure costs until you’ve already had the procedure done (in this case, until a student has applied and gotten accepted). Granted, there are “net price calculators,” but these can’t determine if you would get a merit scholarship from a school. Often, full-pay families who think they are going to pay the full price tag at a college will receive “merit aid” to less highly ranked schools, but it’s very rare for a top-ranked college to give out this merit aid because these schools don’t compete on price. The vast majority of colleges, however, will dole out discounts and call it “merit aid” because that sounds more catchy than “we want you to attend and pay as much as possible, but we think you probably won’t attend unless we entice you with a discount.”
Contrary to public perception, the actual cost of college is decreasing (again, excluding the most highly selective colleges, though they also typically offer much more generous need-based grants to students, so, if a low-income student can get accepted, these colleges are likely to be less expensive than any others for them).
Notice the steep rise in “grant aid” in the graph. Colleges are giving out more grant aid (again, often called “merit aid”) to entice students to enroll, and thus the actual average cost of attending college is declining.
But why is the average cost of college decreasing? Supply and demand.
Enrollment in college peaked in 2011 and has been steadily declining since then. That’s bad news for colleges. But, it’s actually good news for students: as colleges compete for a smaller pool of students, they are forced to lower their prices to do so.
So, whether it’s real merit aid (a college is trying to attract you to attend because of your high grades and/or test scores) or “merit aid” (a college is trying to attract you to attend because you can and would pay more than their average student), more colleges are offering more of it.
More Merit Aid From States
In 1980, state grants to students were 100% need-based. Zero gave merit aid grants.
By 2021, 27% of all state grant dollars were awarded based on merit, not need.
However, how much merit aid students get varies dramatically based on their state and the college they decide to attend.
For instance, in Georgia and Arkansas, 0% of state grant aid is need-based — it’s solely based on merit. But, in Texas, 100% of the state grant aid is need-based.
More Automatic Merit Aid
While most colleges offer their own merit aid and merit scholarships, some colleges and states offer automatic merit scholarships based on a student’s high school GPA and/or standardized test scores.
To find automatic merit scholarships from colleges, the best resource is MeritAidGrids.com. For instance, the University of Mississippi automatically gives in-state students scholarships that range from $12,000 to $54,448.
- $12,000 scholarship for a 3.5 GPA and an 1130 or 23 on the SAT or ACT, respectively.
- $54,448 scholarship for a 3.5 GPA and a 1450 or 33 on the SAT or ACT, respectively.
For automatic state scholarships, families will need to be aware of what their state offers (or likely doesn’t offer — in New Jersey, for instance, there are no automatic merit scholarships). Florida’s Bright Future Scholarships are the most prominent example of automatic state merit aid:
- 100% free tuition to any public university in Florida for a weighted 3.5 GPA and a 1330 or 29 on the SAT or ACT, respectively.
- 75% free tuition for a weighted 3.0 GPA and an 1190 or 24 on the SAT or ACT, respectively.
More Students Heading South
Most parents with college-age kids have heard that more kids from the Northeast are heading to the South for college. That rumor is true.
I agree with other commentators that warm weather and politics are factors, but I think affordability is the driving factor. Many of these schools give automatic scholarships to out-of-state students.
Using the University of Mississippi again as an example, it gives automatic scholarships to out-of-state students that range from $14,000 to $113,760 over the course of four years.
Why would the University of Mississippi give larger scholarships to out-of-state students? Because the out-of-state tuition cost is higher, so the University of Mississippi offers out-of-state students larger scholarships to effectively give them in-state tuition prices (with its highest automatic merit scholarship, the University of Mississippi is only $14,060 per year for out-of-state students).
Why would these southern states offer such generous merit aid to out-of-state students? Because many students stay in the same state that they went to college, so, if southern states can attract the best and brightest students to attend college there, then those best and brightest students are much more likely to stick around and become residents of those states. It’s a clever strategy that seems to be working.
More Merit Aid Predicted
The decrease in college enrollment is accelerating — that’s good news for families trying to afford college because more colleges will compete by lowering their prices. Eventually, schools in the Northeast will likely decide to more transparently compete on price by offering their own automatic merit scholarships — that too would be good news for families. For now, families should keep an open mind: colleges are competing for you, and many have the transparency to give you automatic merit scholarships based on GPA and SAT/ACT scores.
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