I wanted to share this note that I got today from a mother, who wonders about the fairness of merit aid scholarship policies. In my next post, I’ll comment on Rebecca’s note. I’d urge you to share your thoughts on this subject in the comment box below.
– Lynn O’Shaughnessy
Hi Lynn,
I would love it if you would write (perhaps again) about those of us with less than full need for tuition at liberal arts colleges, but more need than our Expected Family Contribution on the FAFSA would indicate.
Our 2012 adjusted gross income is about $127,000, and our EFC is just over $38,000, just about $20,000 less than the full cost of the expensive liberal arts colleges. Carleton, Macalester, Pitzer and Macalester are among those to which my son has applied. All these schools cost in the mid to upper 50′s, and all “full need” schools, with little merit for non-National Merit Finalists).
Carleton College
My son has also applied to other schools which award merit aid as well as need-based aid, some up to half or full tuition (Lawrence, Knox, University of Puget Sound, Kenyon, Oberlin). Lots of schools, yes, but the reason we agreed to allow him to apply to that many is that financial aid for those of us who are neither full pay nor full need seems to be a complete crap shoot.
The net price calculators returned results varying by up to $15-20 thousand a year in cost to us. Some of that is accounted for by the difference in original cost, but some of it is the variation in what the schools seem to think we are capable of paying.
Early Merit Scholarships
My son has received two early acceptances, from Knox and Lawrence, each with approximately $20,000 in merit money – a fantastic result, and a well-deserved recognition of the stellar record my son has amassed throughout high school. In spite of that record and the wonderful merit offers, we’re not likely to receive any additional financial aid from either of those schools, because their merit offers exceed our need, given their costs.
My guess is that either school would have provided approximately that amount of need-based aid, or slightly less, if my son had not qualified for merit aid, and I expect that at least some of the schools from whom he has not yet heard will provide an equivalent amount of need-based aid if he is accepted.
So for those fabulous students from families like ours with some financial need who can get accepted at these great schools, the merit aid, unless it exceeds our identified need amount, does not dramatically change the bottom line cost to us.
Merit Aid vs. Expected Family Contribution
If we could afford to pay full costs, the merit aid would directly reduce our costs, and it would (obviously) be aid provided in excess of our need. Yet for those of us with some financial need, merit aid being offered by these schools is essentially subtracted from our “need” amount, rather than being available for our use in paying our EFC.
It seems like many of the ways that schools choose to use their financial aid dollars seems to be social engineering of one sort or another. I am not at all clear on the theory behind providing merit aid in excess of need to 
full-pay families, while not allowing merit aid to be used to pay our EFC.
I have additional concerns (in the context of need-based aid) about schools providing accommodation of families’ choices to pay for private elementary and high school tuition, yet requiring tax-deferred retirement contributions to be added back in and considered as income for that year. What goals are the schools who make these decisions seeking to accomplish with the policies they employ?
I know that the merit aid offers are made before the schools have a full sense of a given family’s financial circumstances, so they wouldn’t necessarily know whether a high caliber student would require additional need-based aid or not, or whether they might be a full-pay student, whose family would benefit from the merit aid in a way that a family with some financial need might not. That is, they wouldn’t know whether the merit offer is money they might not otherwise expend, or whether it is just substituting for need-based financial aid it would otherwise provide to a partial-need family.
Unfair Merit Aid Policies?
It seems exceptionally unfair to high caliber students in the partial need category to not allow merit aid to be used by the family to pay the EFC.
Please understand that I know this is a situation confronting a fairly narrow range of students, and that we are, in many ways, very lucky to be in circumstances where it affects us. The policies will not determine whether or not my son can go to school, or even whether he can go to one of these horribly expensive private schools, but they clearly make an enormous difference in what a given family will pay for that privilege.
I would love your help to better understand what the colleges’ goals are with these policies. Otherwise, they just seem rigged to help the very wealthy. Would love to hear your thoughts. And thank you for your blog – it has been enormously helpful for us in this process.
Rebecca
Rebecca wrote a thoughtful note that demonstrates that she is a lot more savvy about this subject than most parents. So what do you think folks?
Are you frustrated with how college price themselves? Are merit scholarships fair? I’d love to know what your opinion is. Lynn O.
Learn More from The College Solution:
What Is Your Expected Family Contribution?
A Wealthy Mom’s College Questions
5 Reasons to Attend a Liberal Arts College
8 Financial Aid Mistakes to Avoid