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Basically, the entire National Merit Scholarship program reflects the reality of merit scholarships in general.
The most valuable merit scholarships are coming from schools that are trying to attract highly qualified students to their schools. Don’t expect any sort of significant merit reward from colleges that already have more exceptional students than they know what to do with.
I do think you are right to be cynical about how students fare in the process bc it is oblique and there is no clear view of what is needed from school to school. Our kids do face a lot of disappointment bc it is personal to them. They are used to being evaluated compared to their peers in their schools. This statewide, national, international filter is a totally different ball game and kids are expected to know how to enter the playing field when they have no idea of the rules, how to play the game, or who the other players even are.
This is my just btdt multiple time perspective. I don't know how valid it is, but this is my take on what we have experienced. Automatic scholarships are an essential buffer. They are a no risk, positive back up plan.
Then, when it comes to other scholarships, I want my kids entering into the process with zero hope of actually being awarded any competitive scholarships bc the odds of my child having that perfect blend of what is being looked for is unlikely. They apply, b/c the odds are 0% if they don't. But it really doesn't mean their odds are much more than 0% if they do and that is the perspective I want them to keep in mind. All schools say essentially the same thing for competitive scholarships: top students with extraordinary achievements. Well, the threshold for "top student" and "achievements" is extremely far from being clearly defined. It helps to understand the school and research the previous students who have been awarded their scholarships. It helps to know where your student fits in their college data set. For scholarships, my first filter is to go to collegedata.com. Look at the admissions tab, scroll down and see where your student fits in the breakdown of test scores. They need to be in the top bracket.
Next I read through threads here and the school's website. If you read through profiles of students of who is awarded what, different schools are searching for very different things. For some schools, Vandy for example, those perfect/near perfect test scores seem to matter a lot bc that seems to be a driving filter for them.
For other schools, it seems that after initial filters other factors drive decisions. For example, some schools seem heavily weighted by advertising power. Richmond is a good example. Scroll down to the bottom of this page: http://admissions.richmond.edu/studentprofile/index.html That page seems to sum up that they want to be able to promote the accomplishments of their incoming students as a recruitment tool. That "number on a star" probably reflects one of their scholarship filters.
Really, my btdt multiple time view is that schools want to be able to promote the successes of their UGs and grads as a recruitment tool. Those students who fit the profile that they are searching for to meet those needs are the ones that are going to be recruited to attend via scholarships. Whatever they want to be able to promote in the future that they think your student will bring to their campus, that is who they want. But that______ is what our kids don't know.
But if students don't have the threshold score/GPA/course rigor plus the extra "whatever" that puts them in the tippy top of the applicant pool, the odds of being awarded a competitive scholarship are extremely slim. One back up plan we have in addition to the automatic scholarships is to apply to schools further down the in college rankings in order for our students to rise in that applicant pool. As they filter to the top of the applicant pool, the odds of being reviewed for scholarship increase. (My kids fill out a lot of applications to the schools ranked around 100.)
There are absolutely lots of schools that "value a "smart grinder who is quiet and a bit inside the box'." The very serious issue is finding those schools that will reward those attributes with scholarship $$. Those are the ups in this rollercoaster ride.