Let’s talk about the free money. No, we’re not talking about funding college through loans that need to be paid back at a later date. This is about two of the most common types of awards from schools that help to reduce the cost of college on a dollar-for-dollar basis.
Why differentiate between merit and need based aid?
Knowledge is power 📚. Having a better understanding of how financial aid works, and how it differs school by school will allow your child to have a more calculated school selection process. This is about mapping out the financial piece of the college process, rather than throwing darts at different schools and hoping for some free money to come your way upon receiving the financial aid award letter.
Merit based aid 📕
This is financial aid based on academics. It’s your classic academic scholarship based on a strong GPA and SAT / ACT scores.
Need based financial aid 💲
This is financial aid based on financial need. Think of this as free money for families that don’t have the financial means to afford the cost of college.
How do schools differ?
Different schools have different tendencies – For example: Many of the Ivy league schools simply don’t award merit-based awards. To put this in perspective, even if your child has a 4.0 GPA and 1600 SAT score, they won’t receive merit-based award money from Yale. Instead, Ivy league schools are some of the best at meeting a family’s financial need, and providing some of the largest dollar amounts of need based financial aid.
On the other hand, some schools don’t meet a large percentage of financial need, and instead offer substantial merit-based awards. For the example student above with strong academics, applying to these types of schools offers substantial opportunity to reduce the cost of college.
How to identify schools that fit your profile
This is one of the ways that we help our clients reduce the cost of college. By providing our clients with financial aid estimates before their children apply, they know upfront whether a school is in their budget. In addition, we’re able to suggest additional schools to consider that are likely to provide more financial aid based on the student’s academic or financial profile.
Have questions about need or merit based financial aid for your child? Feel free to reach out below!
All the best,
Andrew Holmes, Certified College Planning Specialist™
Check out my recent whitepaper: 5 College Planning Mistakes to Avoid
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.