What is Merit Aid? Everything You Need to Know About Merit-Based Financial Aid

When you start looking into all the different types of financial aid, your confusion level may feel like it’s flying off the charts. Among the different types of financial aid, including loans, grants, scholarships and work-study (the main types), merit aid is another type of financial aid. 

What is merit aid?

Merit-based aid is a type of financial aid that colleges and universities offer to students. It is not need-based, meaning that it doesn’t consider the financial need of students or families. Students can also receive merit-based aid (also called merit scholarships or merit awards) for anything else other than need-based aid. 

They are one of the best ways to pay for college because it’s money your child doesn’t have to pay back. Let’s unpack that further in this article so you know what merit-based aid is and how your student can receive it.

How Does Merit-Based Aid Work?

Now that we’ve answered the question, “What is merit based aid?” — let’s talk about how it works.

You may have heard that most students won’t have to pay sticker price for their institution, and it’s true — many schools might knock off $30,000 from the sticker price, and tuition discounts have increased in recent years.

If your child must meet certain requirements (such as certain grades, extracurriculars, and test scores—though test scores aren’t as considered as in the past), they may be able to qualify for a merit-based scholarship. 

The merit-based aid may be automatic, meaning that your child might receive it without having to do anything else except apply through the regular application process. You also might have to apply using a separate application. 

Once your child applies, the scholarship or admission committee will determine who should receive the scholarship based on all requirements. Merit-based aid might be renewable every year, but it depends on the scholarship. 

For example, a college might offer cumulative scholarships based on grade point averages, like this:

Cumulative GPA	Scholarship Amount
4.0 and above	$8,000
3.85–3.999	$7,000
3.4–3.849	$6,000
2.9–3.399	$5,000
2.89 and below	$4,000

The college or university will then subtract the merit-based scholarship from the full cost of attendance, plus other aid, to arrive at a total cost for your student.

Types of Merit-Based Aid

What is merit based financial aid in terms of the different types available?

Merit-based scholarships are divided into five types: automatic, semi-automatic, competitive, national merit/recognition and talent-based, each with different criteria, ranging from academic performance to specific talents, such as:

• Academic scholarships: Academic scholarships might be based on grade point average and standardized test scores. Many colleges and universities offer academic scholarships to their best and brightest applicants. For example, a school might offer a merit-based academic scholarship to students with a 3.5 grade point average and above for its highest-tier academic scholarship, and a little lower academic scholarship to those below a 3.5.
• Athletic scholarships: Believe it or not, athletic scholarships are merit-based because they aren’t based on need. If your child is the top-ranked basketball player in the country, it’s likely that they’ll get offered some sort of athletic scholarship. Some athletic scholarships aren’t full scholarships — they are often partial scholarships.
• Music/art scholarships: If your child has a talent in music or art, they may qualify for a music or art-based scholarship at many colleges and universities. When I worked at the college, we had music- and art-based scholarships for students to apply and audition for.
• Major scholarships: Some schools offer scholarships based on the major your child would like to pursue. For example, they may offer business scholarships for students interested in majoring in business. 
• Leadership scholarships: If your child shows high evidence of leadership skills, they may be able to apply for leadership scholarships as well.

These aren’t the only types of merit-based aid your child may qualify for. Your best bet is to scour each school’s website to look into each opportunity.

Colleges offer the bulk of merit scholarships, and they’re often based on GPA or test scores. State programs, like Georgia’s HOPE or Florida’s Bright Futures, provide scholarships using lottery funds. Private organizations such as companies or local clubs offer additional awards.

Who Can Qualify for Merit-Based Aid?

Anyone who qualifies for the scholarship qualifications can qualify for merit-based aid. It’s important to read through the requirements for each scholarship to determine whether your child will meet them. 

Common qualifications may include: 

• Strong GPA or demonstrated academic improvement
• Leadership experience
• Community service involvement
• Exceptional talent in athletics, arts or music
• Strong letters of recommendation
• Rigorous coursework (AP, IB, Honors classes)
• Personal essays or statements showcasing goals and achievements
• National or local recognition in competitions or achievements
• Participation in student government or school clubs
• Awards and honors from academic or extracurricular activities

Also check into how your child will need to maintain eligibility (such as keeping up a certain GPA or completing coursework). In most cases, merit scholarships are renewable at colleges — your child may be able to receive the scholarship every year for four years.

How to Get Merit-Based Aid

Now, how should your child take steps to receive merit-based aid? Let’s take a look. 

Step 1: Research. 

Do as much research as you possibly can. Look into various colleges’ scholarships and other aid from various sources. Check into the specific requirements for each scholarship to ensure your child will qualify, including the documents needed (such as transcripts and recommendation letters).

The best way to get merit aid is to put strong merit aid schools on your child’s list early on in the admission process. It’s painful for both parent and student to realize that even though you’ve been accepted, you can’t afford to go. 

Consider prioritizing financially fit schools over name-brand colleges. Dream schools can quickly turn into financial nightmares. Make sure your shortlist is populated with generous merit aid colleges, especially if you need funds for more than just out-of-pocket expenses.

Step 2: Apply. 

It’s important to note that in some cases, colleges and universities will consider your student for merit-based aid automatically. However, some will have separate applications, with their own deadlines and requirements (essays, letters of recommendation, interviews), particularly if your child applies for large awards, such as full-tuition merit-based scholarships.

Next, ensure your child follows all the directions to qualify for the award. For example, if the merit-based award requires a 500-word essay to qualify, ensure your child submits a 500-word essay, not a 700-word essay or a 400-word essay. You want to follow the directions exactly. If your child is a couple of years away from applying for merit-based aid as a senior, consider encouraging their academic performance or increasing their extracurricular involvement. 

Step 3: Fill out the FAFSA.

Filling out the FAFSA is a must. Many schools need a completed FAFSA to get full consideration for merit aid. Remember, merit aid can be awarded on top of need-based financial aid.  

Your merit aid award will likely be included in your admission letter. If you’re accepted to multiple schools, compare your offers and don’t hesitate to call your top choice if the merit aid offer is lower than merit aid offers you received from other schools.

Benefits of Merit-Based Aid

The biggest benefit of merit-based aid is obviously that your child receives helpful scholarships that help them attend college. However, they can also give your child a way to recognize their hard work and talents, no matter your financial situation. In other words, your child can receive scholarships for more than just need-based scholarships and other aid.

Challenges and Considerations

The downsides to applying for merit-based aid is that it is highly competitive, some require renewal conditions (like maintaining a specific GPA) and limited availability. Not all institutions or entities offer merit-based aid. Learn as much as you can about the requirements before your child opts for merit-based scholarships.

Merit-Based Aid vs. Other Types of Aid

The biggest comparison factor between merit-based aid is need-based aid. Need-based aid is aid that students receive based on financial need. For example, you can receive work-study, grants, or student loans, such as Parent PLUS loans. Grants and loans may or may not be need-based.

• Work-study: You must file the Free Application for Federal Student Aid (FAFSA) to qualify for work-study, which students will receive if they show need. Students usually work on campus and receive a paycheck, which they then can put toward their tuition or use as spending money.
• Grants: Grants, which are often need-based, may come from your state or may be nationally affiliated. In many cases, your child will need to file the FAFSA to receive them. You usually do not have to repay grants (unless you fail to fulfill the grant requirements).
• Loans: Some loans are need-based, while others are not. Direct Unsubsidized loans are non-need-based federal loans, while Direct Subsidized loans are need-based. Private loans are not need-based loans. Learn the difference between private vs. federal loans. 

You can talk to your child about combining merit-based and need-based aid to optimally fit all your financial aid puzzle pieces together. For example, you might suggest that your child take on a mix of merit aid, work-study, and grants to put together a debt-free degree.

Learn more: What is Room and Board?

How Merit-Based Aid Impacts College Decision-Making

Merit-based financial aid allows students to pursue higher education with financial support. Therefore, whatever a college or university offers, your child will likely take — gladly — right? Let’s give an example. 

Let’s say you have a school with a $40,000 cost, and the school offers a $10,000 per year scholarship. That leaves you with $30,000 to cover for the first year, a smaller bite than the original cost. A cost of $30,000 with a 10-month payment plan would cost $3,000 — an even more manageable bite overall. While still an investment, this is often a more feasible payment structure for families compared to managing the full cost upfront.

Can you see how merit-based aid makes a huge difference in the cost of college? It can enable your child to pursue higher education at a manageable cost and reduce financial stress for families over the long term.

Merit-Based Aid Can Help You Afford College

Merit-based aid is one of the best ways to afford college. Some colleges will give your child thousands in scholarships. Evaluate all your child’s options, start your child’s search early, and stay organized.

Again, it’s so important to recognize that merit aid can take a HUGE CHUNK out of your yearly costs at a college or university. Take it seriously, because it can be so worthwhile and important to investigate for your child. (And don’t forget to explain the benefits of merit aid to your child.)

Learn more: Do You Get Extra Financial Aid for Off-Campus Housing? and How to Get In-State Tuition When You Live Out of State

FAQs

Still have unanswered questions related to “What is merit aid for college?” Take a look at our FAQs for more information about what is a merit aid. 

Do all colleges offer merit-based financial aid?

No, not all colleges and universities offer merit-based aid, while some offer a lot of merit-based aid to students. Liberal arts colleges tend to offer a lot of merit-based aid, for example.

Merit aid can highly reduce the sticker price of colleges, so consider how you might use merit aid to your advantage while paying for college. College may cost more if colleges don’t offer merit-based aid. 

What school gives the most merit aid?

Private colleges and universities typically offer the most merit aid, as do schools with high endowments. However, it’s up to you to do your research into the colleges that your child is interested in to learn about the merit aid opportunities at each institution you’re considering. 

What is the difference between FAFSA and merit?

It may seem confusing to understand the difference between the FAFSA and merit. It’s important to understand that the FAFSA is a form, while merit aid is actual aid received. There is a difference between need-based aid your child gets from the FAFSA and merit-based aid. Merit-based aid is not based on need — it’s based on merit, or your student’s accomplishments, hard work and accomplishments.

What is a good GPA for merit scholarships?

Merit-based scholarships allow you to pursue a wide variety of GPAs for scholarships. However, the higher their GPA, the better your child’s chance for merit-based scholarships at colleges. For example, in the example in the table above, a 4.0 GPA and above allows students to receive $8,000, while a 3.85–3.999 allows students to receive $7,000 per year. Your child could miss out on an extra $4,000 with a 3.9 over the course of four years. Talk to your child about the benefits of maintaining a high GPA so your family can save money on college.