The Difference Between Colleges That Meet Need and Colleges That Give Merit Aid
College aid from falls into two broad categories: need-based aid and merit aid. Some colleges commit to meeting the full demonstrated financial need of admitted students. Other colleges award merit scholarships based on a student's academic record or achievements, without regard to income. Some colleges do both.
The two approaches can produce different net prices for the same student. The distinction matters most for middle-income families, whose calculated financial need may be small or zero at some colleges.
This article explains how each aid model works, how the two compare, how they can interact at the same school, and where to find out which approach a college uses.
What Does It Mean When a College Meets Full Need?
A college that meets full need covers the gap between its cost of attendance and the amount it calculates a family can pay.
This gap is called demonstrated need. Cost of attendance includes tuition, fees, housing, food, books, and other expenses. The family's expected contribution comes from a formula. For federal aid, the formula uses information from the FAFSA, which determines the Student Aid Index (SAI). Colleges that meet full need may also require the CSS Profile and use their own institutional formula, which can produce a different number than the SAI.
A need-based aid package can include grants, federal student loans, and work-study. Some colleges replace loans with grants in their packages, an approach called a no-loan or loan-free policy. The mix of grants, loans, and work-study varies by school.
A college's promise to meet full need covers the need its formula calculates, not the gap between the cost of attendance and what the family budget allows. When a family's calculated contribution equals or exceeds the cost of attendance, demonstrated need is zero.
Colleges without a meets-full-need policy may cover part of a student's demonstrated need and leave the remainder to the family. This practice is called gapping.
What Is Merit Aid, and How Is It Different?
Merit aid is money a college awards based on academics, talents, or other achievements, regardless of a family's income or assets.
Merit scholarship criteria vary by school and can include GPA, course rigor, test scores where submitted, leadership, or talent in an area such as music or art. Some awards are automatic and tied to published GPA or test score thresholds. Others are competitive and may require a separate application, essay, or interview. Renewal may depend on maintaining a minimum GPA.
Because merit aid is not tied to financial need, a student can receive a merit award when the family's calculated need is zero. This is the main difference between the two models. A meets-need college measures what the family can pay. A merit aid college evaluates what the student brings to the incoming class.
A student's position within a college's applicant pool can affect merit consideration. A student whose academic profile places them toward the top of one college's admitted students may be a stronger merit candidate there than at a college where the same profile falls near the middle. (The article on what merit aid is and how it works covers award types in more detail.)
How Do Meets-Need Colleges and Merit Aid Colleges Compare?
Meets-need colleges base aid on a family's finances. Merit aid colleges base awards on the student's record. Some colleges use both.
| Colleges That Meet Full Need | Colleges That Award Merit Aid | |
|---|---|---|
| Basis for the award | Demonstrated financial need | Academic record, talent, or other achievements |
| How the amount is set | The college's need formula (FAFSA, and CSS Profile at some schools) | The college's criteria, published or unpublished |
| Result when calculated need is zero | No need-based aid | A merit award is still possible |
| Forms involved | FAFSA; CSS Profile at some schools | Varies by school; some require the FAFSA to be considered for merit aid, and others require no financial forms |
| Estimating in advance | Net price calculators estimate need-based aid | Some net price calculators include merit estimates; others do not |
Can a College Meet Full Need and Also Offer Merit Aid?
Yes. Some colleges meet full demonstrated need and also award merit scholarships. Others limit institutional aid to need-based awards.
At colleges offering both, the two types of aid can interact in different ways:
Merit counts toward need. The merit scholarship becomes part of the need-based package and reduces the need-based grant by the same amount. The source of the aid changes, and the total stays the same.
Merit is added to need-based aid. The merit scholarship is awarded in addition to the need-based package, which lowers the family's cost beyond the need-based amount.
A college's financial aid office can explain which policy applies to students who qualify for both types of aid.
Some highly selective colleges award no merit scholarships and base institutional aid on financial need alone. At these schools, a family with zero demonstrated need pays the full cost of attendance, apart from outside scholarships or athletic awards where offered.
Where Do Middle-Income Families Fit?
For middle-income families, demonstrated need may be small or zero at some colleges, which can make merit aid a larger factor in net price.
Need-based formulas weigh income, assets, and household size. The FAFSA and CSS Profile formulas differ. The FAFSA no longer factors in the number of children enrolled in college at the same time, while colleges using the CSS Profile may still consider it. The CSS Profile also collects information the FAFSA does not, including home equity, which some colleges use in their calculations.
For a family with a higher calculated contribution, a meets-need college may offer a small grant or no grant. At the same income level, a college offering merit aid may reduce the price based on the student's academic record. Two colleges with similar sticker prices can produce different net prices for the same family. (The difference between sticker price and net price is covered in a separate article.)
The reverse can also apply. A family with demonstrated need may receive more aid from a meets-need college than from a college offering merit aid but leaving part of need unmet. The college with the lower net price depends on the family's financial profile and the student's academic profile together, and the answer can differ from one school to the next.
How Can Families Tell Which Approach a College Uses?
A college's Common Data Set, financial aid website, and net price calculator show whether it meets full need, awards merit aid, or both.
Common Data Set, Section H. This section reports the average percentage of need met for students who received need-based aid. It also reports the number of students without financial need who received non-need-based scholarships, along with the average award. A percentage near 100 points to a meets-full-need policy. A count of zero students without need receiving scholarships indicates the college awarded no merit aid to those students in the reported year.
The financial aid website. Colleges with a meets-full-need policy may state the commitment in their aid policy. Scholarship pages may list merit criteria, award amounts, deadlines, and whether a separate application is required.
The net price calculator. Colleges participating in federal student aid programs are required to post one. Calculators estimate need-based aid. Some also estimate merit aid from GPA and test scores, and others do not.
The financial aid office. The office can confirm whether merit aid reduces need-based aid and what renewal requires.
Common Data Set figures describe a past academic year and are averages across enrolled students. An individual student's award can differ from the average.
The Main Distinction
Meets-need colleges award aid based on what a family can pay. Merit aid colleges award aid based on the student's academic profile, talents, or other strengths. Identifying which measure each college on a list uses can make its likely net price easier to estimate.
Which model produces the lower net price varies by family and by school.
Working Through This for Your Student's List
Blue Birch College Consulting helps families find the right colleges at the right price, with cost, merit aid, and fit evaluated together. Support includes net-cost estimates for colleges on the list, research into which schools award merit aid to students with a similar academic profile, and guidance on need-based aid where it applies. The goal is a list balanced across academic, social, and financial fit.
Schedule a 30-minute consultation to talk through your student's college search and how this process would apply to your family.
