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Merit Aid: A Win-Win?

Students and families who may have difficulty affording the sticker price for U.S. colleges and universities often have a basic understanding of need-based financial aid. But there’s more to know. There’s merit aid, too.

Merit aid refers to a financial award or scholarship that a school offers to a student whom it seeks to recruit based on academic achievement or a special quality or skill. It may be offered in combination with need-based aid, or independent of it, to students who demonstrate financial need, or to students who have no need at all. Merit aid is issued by admissions offices, not financial aid offices. Unlike a loan, it does not need to be paid back. Schools award it using their own institutional funds, not federal money, which is good news for international students: they can qualify.

For families that are ineligible for need-based financial aid and yet which will struggle to afford the cost of college, merit aid can be a game-changer. It can make an expensive school significantly less so, and reduce a family’s need to borrow to pay their bills. And, finances aside, a merit award is an explicit acknowledgement by a school of a student’s hard work and commitments, and a message sent loud and clear that “we want you.” In a tense application season, such affirmation may be worth its weight in gold.

According to a recent annual survey by U.S. News and World Report, an average of 15% of students enrolled at 1,031 U.S. colleges and universities received some form of merit aid for the 2019 - 2020 academic year. At 13 exceptionally generous schools, 46% of students on average received a merit award.

As the survey shows, the list of schools that provide merit aid is long, comprising publics and privates, large research universities, small liberal arts colleges, and more. The list is also wide, with schools on both coasts and in between. Many are selective schools that use merit awards to compete for high-achieving students who may have offers of admission from multiple institutions. (As a general policy, Ivy League schools do not provide merit aid, pledging instead to fully meet admitted students’ demonstrated financial need.) With the right tools, students can identify these schools, and build a list of "right fit" colleges and universities that are academically appropriate and affordable.

But caution is in order. Merit aid is unpredictable. It is awarded by admissions committees whose assessment of merit is subjective and constantly shifting, since a school's institutional priorities change. One year, a school may need a bassoon player for the orchestra or a pole-vaulter for the women's athletics team, while another year it may need to populate its new data science department. Adding more uncertainty, before the COVID-19 pandemic, standardized test scores often figured prominently in the eligibility assessment; with more than 700 schools now declaring themselves test-optional, fewer students are submitting test scores, thereby removing one piece of data from the aid equation. Also, awards vary widely in value, from a few thousand dollars to a substantial share of tuition, and some come with conditions. For example, they may be contingent upon a student's commitment to a certain major, awarded for only one year, or rescinded and billable to the family retroactively if a student transfers. (In other words, read the small print.)

Merit aid is a tool and an investment used by schools to mold a class and manage their enrollment. The latter is precisely the point, because for those students who are lucky enough to be beneficiaries, it can mean the difference between enrolling or not.


Do you need help navigating the U.S. financial aid process, or building a smart university list?

Contact us at or at (420) 602 612 705.

An initial consultation is free.

Visit the UB4U library for additional resources.


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