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If a student qualifies for any of the federally funded grants (Pell, SEOG) or state need based grants, the schools would use that money FIRST and then award any merit aid beyond that.
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"Merit aid" is something which with I'm unfamiliar. A merit award "adjusted" based on need sounds like financial aid packaged to sound like a pseudo-honor.
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Unless you know for certain you are going to get something back in return for your personal information, it's best not to disclose it.
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I concur.