Financial Aid vs Merit Aid

[snowbeltmom]

I thought I understood the difference between the two terms.  I thought merit aid was awarded due to achievements of some type, and occasionally, a family's financial situation was also taken into account.  I thought financial aid was awarded based strictly on the student's tax returns, and a student's extracurricular achievements were not a factor when awarding financial aid.

 

Kalamazoo College was just sanctioned by its athletic conference for the methods it uses to calculate students' financial aid awards. 

 

From the newspaper article:

The way K-College awarded financial aid was found to be impermissible because the school considered an applicant's extracurricular activities, including athletics, when determining the amount of financial aid he or she would receive. The NCAA prohibits a school to link athletics with financial aid in any way, so the school was found noncompliant.

 

"We were looking at our applicants with what's called a holistic admissions process," said Kate Worster, K-College's vice president of marketing and communications. "We looked at your extracurriculars. It might be your participation in band, it might be you're a member of the French Club, or it might be athletics.

"To look at those things in the admission process is well within the NCAA rules. What happened was the extracurriculars got carried over into financial aid, and that is against the NCAA rules."

K-College no longer considers any of an applicant's extracurricular activities when awarding financial aid.

 

I wonder how many other colleges also factor in extracurricular activities when calculating need-based aid?  I always thought that the wide variations in financial aid awards were due to how the colleges consider the financial situation, but maybe more factors besides financial are coming into play when a student receives his financial aid award. 

[JanetC]

Need based aid can have preferential packaging. More free money and less loans in a package that doesn't bring cost below your EFC.

 

http://www.thecollegesolution.com/beware-of-preferential-packaging/

 

If NCAA really goes after preferential packaging, a lot of schools will be in trouble.

[Lori D.]

Most people tend to think of Financial Aid as specifically Federal Financial Aid (which are usually things like Pell Grants and Sallie Mae student loans), but financial aid is a broader topic, and includes aid from colleges as well as from private sources.

Financial Aid has two "sub categories":
1. merit aid (scholarships)
    (based on grades/GPA/test scores, OR, ability (athletics, academics), OR quality (gender, ethnicity, disability, etc.)
2. need-based aid (grants, scholarships, loans)
    (based on how the family's finances fit eligibility equations from FAFSA (most frequently), or other formulas) 

And Financial Aid can come in several forms:
- scholarships (merit and/or need based)
- grants (need based)
- loans (need based, to be eligible for certain types of Federal loans)

Scholarships can be merit-based OR need-based OR both. "Inside" scholarships (those awarded by the college) can also be awarded on the basis of other factors alone, or GPA plus other factors:
- financial need
- ethnicity or gender
- first in family to attend college
- athletics
- extracurriculars
- entering a particular degree program

Grants are usually need-based, using the FAFSA and EFC number as the basis for the award. They are usually either Federal grants (such as Pell Grants), awarded for financial need (based on FAFSA) or if military or going into teaching. Or, grants can be awarded by the State, also usually for very specific reasons, such as financial need, or fitting into a specific category.

Loans (from the Federal gov't based on FAFSA) are usually offered to all students, regardless of GPA or need. In addition to these Federal student and parent loans, there are also private lender (bank) loans.

Edited August 23, 2018 by Lori D.

[JanetC]

Loans are usually offered to all students, regardless of GPA or need.

Subsidized loans are offered based on need.

 

Unsubsidized loans are offered above the allowed subsidized amount, up to the limits of the federal direct loan program, regardless of need.

 

Amounts above that, through PLUS or private loans, will require a credit check.

[Crimson Wife]

Not all schools meet the family's full need. A school could decide to take into consideration extracurriculars (such as athletics) when deciding how much of a student's full need to meet. Two students could have identical EFC but student A has more sought-after extracurriculars than student B. The school could therefore decide to meet 100% of student A's EFC but only 70% of student B's.

[snowbeltmom]

Thanks for the clarifications.  I have mistakenly been using the terms "financial aid" and "need-based aid" interchangeably.  I also forgot that not all schools meet full-need.

[JanetC]

The lines between "financial aid" and "merit awards" are no longer drawn clearly. Many colleges have an office of enrollment management that includes both admissions and financial aid. These decisions used to be made by separate staff. Preferential packaging means even need-based awards may include an explicit or implicit merit component.

[MerryAtHope]

Financial Aid has two "sub categories":

1. merit aid

2. need-based aid

 

And Financial Aid can come in several forms:

- scholarships

- grants

- loans

 

Scholarships can be merit-based OR need-based OR both. "Inside" scholarships (those awarded by the college) can also be awarded on the basis of other factors alone, or GPA plus other factors:

- financial need

- ethnicity or gender

- first in family to attend college

- athletics

- extracurriculars

- entering a particular degree program

 

 

Grants are usually need-based, using the FAFSA and EFC number as the basis for the award

Loans are usually offered to all students, regardless of GPA or need.

 

This was always my understanding as well.

 

Kalamazoo College was just sanctioned by its athletic conference for the methods it uses to calculate students' financial aid awards. 

 

From the newspaper article:

The way K-College awarded financial aid was found to be impermissible because the school considered an applicant's extracurricular activities, including athletics, when determining the amount of financial aid he or she would receive. The NCAA prohibits a school to link athletics with financial aid in any way, so the school was found noncompliant.

 

"We were looking at our applicants with what's called a holistic admissions process," said Kate Worster, K-College's vice president of marketing and communications. "We looked at your extracurriculars. It might be your participation in band, it might be you're a member of the French Club, or it might be athletics.

"To look at those things in the admission process is well within the NCAA rules. What happened was the extracurriculars got carried over into financial aid, and that is against the NCAA rules."

K-College no longer considers any of an applicant's extracurricular activities when awarding financial aid.

 

I wonder how many other colleges also factor in extracurricular activities when calculating need-based aid?  I always thought that the wide variations in financial aid awards were due to how the colleges consider the financial situation, but maybe more factors besides financial are coming into play when a student receives his financial aid award. 

 

I'm confused about this ruling. I can understand NCAA saying that a college needs to make need-based aid equitable overall, but I guess I would think of a consideration like extra-curriculars to fall under the "merit-based" side of things. Why couldn't a school reward that just like they reward academic excellence?

[fourisenough]

K College is NCAA Division III, which does not allow athletic scholarships. By taking athletic participation into consideration when determining FA, they were in essence giving 'athletic scholarships', even if they weren't calling them that.

[plansrme]

This was always my understanding as well.

 

 

I'm confused about this ruling. I can understand NCAA saying that a college needs to make need-based aid equitable overall, but I guess I would think of a consideration like extra-curriculars to fall under the "merit-based" side of things. Why couldn't a school reward that just like they reward academic excellence?

 

As someone who has spent more than a reasonable amount of time poring over NCAA bylaws, the essence of the NCAA's position is that academic money has to be automatic and objectively-determined so as to not count against the number of scholarships the school can offer.  If KC is a D3 school, that number is "zero," so taking athletic achievement into account in any way, for a student who goes on to compete in that sport for the school, violates the NCAA rules.  It does not violate any other rules on merit-based scholarships.  Nor would there be a violation if the athletic achievement were in, let's say, diving, when KC doesn't have a diving program.  On the other hand, if KC offers a half-tuition scholarship to any entering student with a 30 ACT, and the entering student has a 30 but also happens to be a star soccer player, that's okay.  Most scholarships that don't count against a school's NCAA limit are of this type, i.e., automatic merit awards based on certain test scores or GPAs.

[MarkT]

Need based aid can have preferential packaging. More free money and less loans in a package that doesn't bring cost below your EFC.

 

http://www.thecollegesolution.com/beware-of-preferential-packaging/

 

If NCAA really goes after preferential packaging, a lot of schools will be in trouble.

Interesting article but it shows academic factors which are OK with the NCAA for division 3 just not extracurricular such as sports.

Of course, Division 1 sports might as well be pros since they get a big preference (such as a top Football player at Ohio State).

 

Good old PrepScholars has a blog:

http://blog.prepscholar.com/what-are-ncaa-divisions-1-vs-2-vs-3

 

[Oh by the way there are a few schools with Division 1 for only one sport such as Lacrosse at JHU and Ice Hockey at Clarkson to further muddy the waters.

These were granted on historical competitiveness in the sport. ]

Edited July 3, 2017 by MarkT

[Corraleno]

Need based aid can have preferential packaging. More free money and less loans in a package that doesn't bring cost below your EFC.

 

http://www.thecollegesolution.com/beware-of-preferential-packaging/

 

If NCAA really goes after preferential packaging, a lot of schools will be in trouble.

 

The kind of "preferential packaging" that Kalamazoo was caught doing has always been against NCAA rules, and they do go after it (hence the harsh sanctions against KC).

 

Schools can consider academic factors and all the nonathletic ECs they want in awarding financial aid, but they cannot decide, for example, that a student who just happens to be an excellent swimmer, and who would be an asset to their swim team, is more deserving of "financial aid" in the form of university grants than a student with the same financial need who is not a swimmer. NCAA strictly limits the maximum number of scholarships that can be awarded per sport, which is usually far below the total number of students on the team (football, basketball, and a couple of other sports being the exceptions), and D3 schools are not allowed to give any athletic scholarships. Allowing schools to count athletic accomplishments in awarding "financial aid" would completely negate the point of having limited scholarships to begin with, because schools could simply give preferential "financial aid" to athletes once they hit the scholarship limits.

 

This is exactly what Kalamazoo was caught doing, in some cases quite blatantly — the baseball coach was actively recruiting athletes with promises that he could get them "increased merit-based financial aid" awards. According to the NCAA, they found at least one athlete on every KC team who had received preferential financial aid.