You Received a Merit Scholarship. What Should You Do?

More and more colleges offer merit-based versus need-based scholarship aid to prospective students, whether they need the aid or not. A college’s merit scholarship policy might not always be fair. But please keep in mind that colleges, like businesses and branches of government, have agendas.

Why have colleges gone in the direction of offering merit scholarships?

• They need and want more students who are most likely to earn a degree; and,
• They need to improve their retention and graduation rates in order to attract more students and recruit the best possible faculty they can.

Colleges usually award merit scholarships contingent on maintaining good to excellent grades in college. Most of the time the minimum GPA is a 3.0 (B) average though I have seen minimums that were lower (2.75 or better) as well as higher (3.25 or better). I recall only one school that I have visited, Juanita College (PA), that did not tie renewal of the scholarship to grades.

Is a merit scholarship always a good thing?

It is, of course, if the merit scholarship is an unexpected surprise from your first-choice school. If costs are not an issue, the scholarship is icing on a very nice cake.

In other cases, depending on the amount of the award and your academic interests, it might pose a problem down the road.

How? It’s “free money.” Isn’t it?

If your family truly needs the merit scholarship to help cover four years of college costs, I strongly recommend that you privately consider the answers to these questions:

• Could we afford to cover costs for this school if we lost the merit scholarship? It is common for schools the require continuing students to maintain higher GPAs for the larger awards. Suppose a $60,000 college makes a $20,000/year award continent on a 3.25 GPA. Your student is interested in a major–for example, math or the sciences–where the faculty are less likely to give As and Bs. If your student does okay to continue, a 3.0 average, but not well enough to keep the scholarship, could you make up the money? It’s one thing to make up for the loss of a small award by working or going into family savings. It’s another to make up for a very large one.
• Were there schools on your final list that were less expensive with no scholarship than the schools that offered the merit scholarship? Unless an awarded student is at or close to the very top of the admit pool it will be rare that s/he will receive a merit scholarship that will bring the price down close to what s/he would have paid to be a resident student at their home state university. If costs and confidence building are both issues, walking into a less expensive school with no pressure to keep a merit scholarship might be a better deal.
• What is the minimum GPA required to keep the award? You want this to be as low as possible. That gives a student more freedom to consider what s/he wants to study, versus finding a major that is “easy enough” to maintain the GPA.
• How much does the merit scholarship fulfill need? It is common for college financial aid offices to send award letters that mention a need-based award as well as a merit-based award. These offices might be using the merit scholarship to fulfill part of all of a family’s financial need. Personally, I do not like this practice. It puts more pressure on students from economically-disadvantaged backgrounds to keep all of their aid. However, if the school does this fairly, the merit scholarship might be used to fill gaps that might otherwise be filled through jobs or loans. If a school offers a financial aid package that includes a merit scholarship and a need-based scholarship be sure that your family will not need to borrow from any source other than the Federal Stafford Student Loan program, if a loan is necessary.
• How much has this school increased tuition and fees in the past? To give an example, when a school charges $40,000 in tuition and fees, then announces a 3 percent (or $1,200) increase, that increase is not likely to be covered through financial aid. At least part of it will come from the student’s wages or your family’s pocket. Merit scholarships are not usually increased each year. Tuition and fees almost always are.

It’s exciting to know that a college wants you so much, it is willing to offer a significant discount to encourage you to choose to enroll there. But that discount, in the form of a merit scholarship, might come with other prices that a college-bound student will have to pay on the way to their degree. It’s wise to get the answers to the important questions before committing to a school where you might be dependent on that award to help cover costs.

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