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How do need based and merit aid come together?

JD7777JD7777 105 replies10 threads Junior Member
I apologize in advance as there are some threads related to this question but I could not find one that I understood entirely. I have a rising 12th grader and have been reading and learning a lot from the forums here. Here is a piece I don't understand that could have significant implications as we work our way towards decisions for our son.

We have run some EFC calculators and they all tend to suggest roughly 30,000. We have a combined income of roughly 140,000 and both work in public schools. Here in Oregon that will mean zero aid for public state schools (UofO, OSU) but could mean significant need aid for private colleges (Puget Sound is one we have looked at).

Thankfully my son is a strong student on paper (4.0 unweighted with 1360 or 1380 SAT and several AP classes) and in some cases will qualify for automatic merit aid. At UofO, for example, he will likely get a couple generous merit awards. Here is the question I have been unable to get... At an expensive private school, take UPS for example, with a 68,000 price, if he qualifies for one of the large merit awards (roughly 20k), will that figure still have our family contribution at 30,000 or would we need based aid and then merit? My guess is that the awards won't combine but I'm not sure how they come together. If we have an EFC of 30,000 and the merit aid at UPS brings total cost to 48,000, does the school typically award need aid to get down to 30,000 (which would be the case without the large merit award) or should we as a family expect to pay the EFC amount regardless of possible merit? If so, should we really think in terms of "merit" at all when looking at expensive private schools?

Hopefully this ramble makes sense as I have re-written a couple times.
edited June 2019
78 replies
Post edited by mom2collegekids on
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Replies to: How do need based and merit aid come together?

  • thumper1thumper1 76554 replies3387 threads Senior Member
    @JD7777

    You would need to contact the school and ask them. Usually, families are still expected to pay the family contribution...but some colleges do allow stacking of all aid up to the cost of attendance. You need to ask at each school.

    In the case you are mentioning....your net cost is $30,000? So what aid is UPS saying you will get on their net price calculator?
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  • eaglerockdudeeaglerockdude 7 replies1 threads New Member
    I think this is the big question that nobody(in terms of the colleges) wants to answer. My situation is similar to yours in terms of income. My child will be a senior. I go to the site of a college that says they meet 100% of student "need" with no loans. And no consideration of "need"...yet they have a calculator button. When you use it, it says your EFC is upwards of 35K or even more. The whole thing makes no sense to me so far. Near as I can tell, if you have low income, you can get really good aid, yet i suspect there are not really that many kids that can take advantage of that. But I guess I have no idea.

    I know what my financial need is based on our paychecks and bills and what we have left over every month. Pretty simple. Why the financial calculators are so far off from that is a mystery to me. :>)
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  • twoinanddonetwoinanddone 23842 replies17 threads Senior Member
    It is school specific, but yes, at most schools the family will still be responsible for the EFC as the school calculates it.

    UPS doesn't meet full need, so there is no guarantee that you'll only be responsible for the $30k.

    Most often, the merit comes off first, so it is $68k-$20k (merit) would bring the price to $48k. Of that, UPS would probably only consider $18k as eligible for the school's aid. You might get that $18k as a grant, but also might get it 'covered' with direct student loans ($5500), work study (~$3000), or other loans.

    Schools that do meet full need would cover that $18k in different ways. Some are 'no loan' so will do it mostly with grants. In those cases your student can still take the $5500 loan to cover part of your $30k.
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  • Erin's DadErin's Dad 33348 replies4079 threads Super Moderator
    EFC calculators are fine but you need to run the Net Price Calculator on EACH school's web site to get the best idea of what your cost will be. Usually the more information the calculator requires (like GPA and scores) the more accurate the estimate you get.
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  • thumper1thumper1 76554 replies3387 threads Senior Member
    edited June 2019
    I know what my financial need is based on our paychecks and bills and what we have left over every month. Pretty simple. Why the financial calculators are so far off from that is a mystery to me.

    @eaglerockdude you know what you feel you can comfortably contribute towards college costs. Very often that is not the same number as what the schools calculate you could give. They use a formula based on your income and assets. And the vast majority of colleges do not meet full need.

    If you are looking at a college that meets full need, guaranteed for all accepted students, and your family contribution is $35,000...your income would be likely in then $130,000 to $150,000 a year range (gross income). If it is one of the VERY generous schools and your family contribution is $35k...then your income is likely much higher.

    The family contribution is a shocker to many families.

    The more important number is what you think you can comfortably pay...because a net cost at that price point will be affordable for your student.
    edited June 2019
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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    The EFC is calculated for eligibility for Federal Aid. Other financial aid providers use this figure too. So do most schoolsin indicating what your MINIMUM required payment might be.

    I say MINIMUM BECAUSE, there are very very few schools that guarantee to meet full need as defined by the FAFSA EFC. Let’s take UPS, as an example.

    If you look up Financial Aid info on the Common Data Set for UPS, you can see that 59% of students had full need met. The average need met was 79%. That includes need met with subsidized Direct Loans and Work study for students.

    By filling out UPS’s NPC, you can get a better idea of how much need your family will likely get met. Any guaranteed merit would be likely be in there too, so you can see what UPS is likely to cost your family.

    Most financial aid offices do work with their Admissions office to make sure that Merit awards are integrated with financial aid. How an individual office does this integration, you have to ask. Usually a student who gets more merit money than what the need is, doesn’t get financial aid. Some of this is due to federal rules which do not permit subsidized loans and Workstudy to be given to reduce EFC. Some state rules for state money do the same. Colleges can do as they please with their own money, but any case I’ve seen, they simply will calculate need reduced by merit money. So it is doubtful, though possible, you get more money than meeting your need. The benefit is that with a merit award as long as your student meets academic requirements, you won’t likely have changed in the award as your income rises.

    Also, UPS reduces self help first, so your student will likely have work hours available to earn money during the school year and can take out Direct loans on an unsubsidized basis. If she gets outside scholarships, Merit money will not be reduced. Any financial aid will be.

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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    @eaglerockdude, what YOU consider your financial need is irrelevant as to what the calculators will say is your need. The FAFSA EFC defines need for federal ( and much state) money. A college will either use that same figure but meet that need as it sees fit or is able to do with their funds or use a whole other calculator.

    So you set your budget up as to what you can and are willing to pay. The FAFSA EFC will tell you the least you are likely to be asked to pay after financial aid. The schools’ NPCs will tell you how much each school will likely expect you to pay. At the end of the application season, when the acceptances, aid packages and merit awards come in, you can see what the various schools to which your DD applied are asking you to pay. That’s how it works.

    Your control in all of this is to make sure your DD knows which schools even have s chance of meeting your cost requirements. If your EFC is more than you can pay, then your DD has to go for schools that have merit money or whose NPCs show that it’s possible she could get more financial aid from that school.

    Let’s say your FAFSA EFC is $30k. That is likely the least you will be asked to pay after financial aid. In order to “beat” that number, your daughter would have to get sufficient merit scholarships to bring the cost down lower than that. Or get accepted to a full need met college that may not give self help so that she can add loans and work towards paying the bills. Those top schools that tend to be generous tend to look at things like home equity that FAFSA does not include and their NPCs may come out higher than that EFC.
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  • ucbalumnusucbalumnus 80204 replies720 threads Senior Member
    A common, but not universal, way of combining merit scholarships and need based financial aid is that merit scholarships replace categories in the following order:

    1. Work study, federal direct loan, unmet need. (reduces net price)
    2. Need-based grants from the school. (does not reduce net price)
    3. Parent contribution. (reduces net price)

    But since that is not a universal methodology, check each college's web site. If not specified, ask the college directly.
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  • mommdcmommdc 11782 replies31 threads Senior Member
    edited June 2019
    At an instate public university.

    My D had a merit scholarship covering tuition, then the state grant was determined according to FAFSA EFC and need, she was packaged with subsidized loan and unsubsidized loan. She received outside scholarships from local organizations that reduced her need and the amount of her subsidized loan.

    Once she was in pharmacy school, she was also offered a $5,000 Health Professions Loan that is subsidized and need based. Once her merit scholarship posted, that usually went away, because she didn't have enough need left.

    Our EFC was too high for work study, the school had an EFC cutoff amount to award work study.

    But she got some subsidized loans and had a campus job that wasn't classified as work study.
    edited June 2019
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  • mom2collegekidsmom2collegekids 84272 replies1047 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    Merit awards from the college gets applied first.

    So if the school costs $68k and your child gets $20k in merit, then the remaining cost would be $48k

    What the school does next depends on how well they typically meet need.

    They may just throw in a $5500 loan and $2500k of work study and leave you with $40k per year to pay. Since your EFC is $30k, and the school doesn’t promise to meet need, they may not give any grants. Or they may throw in a $5k grant.


    UCB...I would say that your scenario more represents how outside scholarships are applied. I would not say that an institutional merit scholarship replaces loans/WS first at many/most colleges. Many colleges depend on the merit + WS + fed loan to be most/all grouping to cover “need”.
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  • browniesundaebrowniesundae 283 replies3 threads Junior Member
    edited June 2019
    You definitely need to check with each college. Although this is npt the norm (D's school is a "meets full need" institution), my daughter's college stacks merit on top of need-based aid (yay!) if the merit comes from the college. Outside scholarships reduce [need-based] aid by 50 cents on the dollar at her school. I would never have known this (not on the school's website as far as I could find) without calling and talking to a real person at the FA office and asking detailed questions. I was a newbie when I made the call -- which was originally to ask a different question -- but just kept chatting and found out some helpful stuff. I always tried to be respectful and courteous when speaking with FA offices (as opposed to "OMG! How can you expect me to pay THAT?!").

    I also called the admissions office to ask about merit aid. I then encourage my daughter to send an email to her AO expressing that the school was her first choice but her family was having a tough time finding a way to make it work financially -- was there anything she could do to increase her chances of receiving a merit award? Guess what - a few weeks later she received a merit award.

    Moral of the story - communicate with each school to get the skinny. Good luck! This whole merit/need-based financial aid journey is not for the faint of heart 😳
    edited June 2019
    Post edited by mom2collegekids on
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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    I’ve not heard of outside scholarships reducing college awarded MERIT awards. Those are stackable, in all I have seen , UNLESS, they are merit within need. Just because a scholarship is so called or the word “merit” is used, does not mean an award is not financial aid.

    You never know how a college internally works with merit/need interplay’s in-house because you usually see get the awards AFTER the school does their integration of the two funds. At some schools there is just one office doing both.

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  • browniesundaebrowniesundae 283 replies3 threads Junior Member
    @cptofthehouse Thanks for catching that! I meant to say "Outside scholarships reduce NEED-BASED AID by 50 cents on the dollar" at DD's school.
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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    Thanks for clarifying. Puzzled me.

    Some need based aid HAS to be reduced. Federal aid other than PELL has to be reduced dollar for dollar. In my state, so does any state money. There are “scholarships”, yes they are so called, that are designated as last dollar, can only be applied to tuition. A college does have to work within those constraints.
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  • browniesundaebrowniesundae 283 replies3 threads Junior Member
    D's school is "no-loan' so not constrained by federal rules, I guess. My overall point is, talk to each school. There are some differences in how aid is treated across institutions which can make a significant difference to the bottom line. You may find out useful info about both need-based and merit aid by picking up the phone.
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  • BelknapPointBelknapPoint 4782 replies18 threads Senior Member
    Just because a scholarship is so called or the word “merit” is used, does not mean an award is not financial aid.

    Even an award that is a straight merit award, with no need component, is financial aid.
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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    @browniesundae , if state funds remain involved, they may have rules. I don’t know if FSEOG funds are still being used, nor do I know if they have to be reduced by merit money.

    Though PELL does not have to be reduced, what some colleges do, is reduce their own aid or even merit if a student has PELL money. They want to keep every bit of funds they can. Most of the finagling is fine in-house before the package is released so there is no way of knowing for sure what adjustments were made.

    It is unfair that EFC can be reduced by merit for those with no need with no restrictions but those who get financial aid , cannot unless the merit exceeds the financial aid and there is money left after meeting need. But that’s the way it works out if necessity for some financial aid money, and out of pragmatism for institutional funds.
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  • eaglerockdudeeaglerockdude 7 replies1 threads New Member
    I really don't think its a matter of "what I can comfortable afford:...I mean if you go to the store, and everyone pretty much has a feel what what a bag of chips costs or valued at..then that should be the price. Just because I can "afford" $10 for a bag of chips...that means I should be happy to pay it? I guess you have to be rich to think like that...which I am not....there are so many people here just quoting the EFC calculator's when we all know that its very flawed because it does not take into account cost of living, in terms of housing mostly, but also other things like utilities, insurance etc. I would have no problem coming up with the EFC if I thought the thing was fair at all, but its not. But thats the way it is. I am not asking for a free education or full ride...just something that makes sense...for example..why do we have this concept that "what you see advertised as retail cost" is not really the cost you will pay...what is this...a car dealership? I think so.
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  • cptofthehousecptofthehouse 29934 replies59 threads Senior Member
    Many people look at different colleges in terms of what it’s worth to them in cost. I know plenty of parents who would come up with full cost for certain colleges, like HYPSMC et al, but not for similarly priced private schools without the name recognition. Parents won’t pay for OOS public schools because they feel they are not worth the price when their instate school, much less. Or why pay the OOS premium when majority of students there paying so much less. Or if there are two similar schools on the table, they will not pay extra just because their kid prefers it.

    These are all cost/value judgments we make. I have friends who were diehard in state public school people and felt paying anymore was a waste, then did an aboutface with their last kid who they could not see making it through a large state school, with maybe s chance at a small LAC.

    I refer to EFC calculators because they are important, essential, in getting most of the financial info needed regarding what a family is going to be expected to pay and forcing ghat discussion. Often, even more info needed to use NPCs for the specific schools. It’s essential to know what parents are willing and able to pay versus what kind of financial aid you can possibly get. It’s a huge revelation at times that results in a big change in the college list.

    I have a cousin whose son was a very good student. She was sure he would get scholarships. The highschool where he went seemed to support that view. No one bothered about EFCs and paying for colleges, etc since he could go to local state college down the street if it came down to that.

    It did, but the young man out and out refused to go that route. It was a terrible family discussion when it became clear that there was a huge gap between what his parents could pay, and what it cost to go away to school. Even state schools Especially the state schools he wanted. And they didn’t think he was so special, and didn’t give him a dime. All he could get were unsubsidized loans.

    He took a gap year and applied for ROTC Scholarships and every other award he could. Retook the ACT, took a course, spent his time working with disadvantaged kids and with BoyScouts( he was an Eagle Scout), made some money and saved it. Got an ROTC scholarship, barely. He was an alternate and it came through. It meant going to Big State U vs commuting to Local State U. It also diminished what he thought about his parents, something that exists to this day
    .
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  • eaglerockdudeeaglerockdude 7 replies1 threads New Member
    At this point if we have been looking at college for a few weeks we all know about the EFC. The point it most of us who would consider ourselves middle class at some point really don't have much hope when we do one. It needs to be fixed, but that has about as much chance as fixing healthcare.

    It is much too general in its assumptions about income etc. Its too black and white.

    Here is an example. Lets say there was a family of 4 doing pretty well in 2008. Then the subprime crash came and one parent was laid off and did not find work for two years. During that time they could not save for college. It so happened that they had kids in a modest private school. But they could not bring themselves to pull the kids out for public school because their kids loved their friends and school much..so they bit the bullet there.

    The wife took an extra job to make up the difference. But still they fell a bit into debt. The unemployed parent has only worked about half the time since that time(most of his work was outsource to india) and only on temp jobs. Most of that income was always trying to catch up from the times not working.

    Yet...there was ONE year that things went pretty well. Both parents were working. THAT happens to be the year that the EFC uses to calculate aid for their child. Not the lean years before, or after, or even now.

    So In this one example, I would say the EFC knows nothing about peoples lives. Its just a machine/calculator with no heart. Fine.

    That family person I am talking about is me. So yeah...I am a bit jaded when it comes to the EFC

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