Merit Scholarship Award, where does it go?

When an honor student at Norwalk High School, Norwalk, Connecticut was awarded a $100,000 ($25,000 per year) merit scholarship for college, he was thrilled; because now he would be able to go to William and Mary College in Williamsburg, Virginia.  John comes from a hard working middle class family.  His mother and father did not go to college, and they were grateful that their son would be able to attend such a prestigious university.

Like most families, John’s parents applied for financial aid at William and Mary where the annual tuition, room and board for out-of-state students is $53,560.  John and his parents filled out the Federal Student Aid or FAFSA form which asks about family income and assets.  (FAFSA does not ask about scholarships a student may have been awarded).

In the original calculation of John’s financial aid package, the college awarded John a grant of $13,500, a Work Study allowance of $1,900 and federal loans of $5,500 leaving a balance of $32,660 that the family would have to contribute.  John and his family assumed that he would be able to apply his annual $25,000 merit scholarship award toward the family contribution leaving a gap of $7,660 which they could afford to pay each year.

The merit scholarship award made all the difference; without it John would not be able to study engineering at his dream school, William and Mary. John and his family were thrilled. That is, until we talked to the financial aid department at William and Mary.

The financial aid department said that they would not apply his merit scholarship against the family contribution.  Instead, they would use the scholarship money to replace the $13,500 grant, the $1,900 Work Study allowance and the $5,500 federal loans. This meant if John wanted to attend William and Mary in the fall, his family contribution would be $28,560 instead of the $7,660 he would owe if William and Mary let him use his $25,000 merit scholarship to cover his family debt. The following chart summarizes the situation:

William & Mary’s Original Financial Aid Offer John’s Financial Aid Assumption (applying his merit scholarship to family contribution) William and Mary’s Actual Allocation of Financial Aid
W&M Grant $13,500 $13,500 $0
Work Study $1,900 $1,900 $0
John’s Federal Loans $5,500 $5,500 $0
Merit Scholarship NA $25,000 $25,000
Family Contribution $32,660 $7,660 $28,560
Tot annual cost $53,560 $53,560 $53,560

John was not the only Norwalk student who received a merit scholarship this year.  Edward, an honor student at Brien McMahon High School, Norwalk, Connecticut also received a merit scholarship from another foundation for $100,000.  Edward wanted to go to Syracuse University where his cousin goes.

Like John, Edward’s family filled out their FAFSA form.  Based on that information, Syracuse awarded Edward $26,820 in grants and scholarships that would be applied against Syracuse’s annual $59,320 bill for tuition, room and board leaving a family contribution of $32,490.  Edward assumed that he could apply $25,000 of his annual merit scholarship toward that and his parents agreed to borrow $7,500 each year to cover the remainder.  Edward was ecstatic, and when he went to visit Syracuse for a weekend, he knew it was the school for him.

Unfortunately, Edward was disappointed to discover that Syracuse’s financial aid policy concerning use of merit scholarship money was similar to William and Mary’sSyracuse would apply Edward’s merit scholarship against his $26,820 in grants not against the $32,490 family contribution.  This meant that the only way Edward would be able to attend Syracuse would be to take $32,490 in loans each year.  This was not something the family could afford to do.

Both John and Edward are Matthew Gaffney Scholars.  The Matthew Gaffney Foundation is a non-profit foundation located in Stamford, Connecticut.  We help very motivated, bright economically disadvantaged students navigate the college admission process through, high school course selection, SAT preparation, and the application process. Our goal is to help students identify colleges and universities that will cover all the student’s demonstrated need with scholarships, grants and a minimum amount of loans.

Fortunately, we have found that not all colleges use merit scholarships the same way as William and Mary and Syracuse do.  In 2001, Princeton University announced. “Admission to Princeton is need-blind for all applicants, including international students, ensuring equality of opportunity for low-and middle-income students.  Princeton provides financial aid to meet full demonstrated financial need of all students offered admission. All grants are need-based…”

Princeton’s policy has made it possible for five Matthew Gaffney scholars to go to one of the finest universities in the country with little or no debt when they graduate.

In order for other schools to compete for these very motivated, first generation students, Yale, Harvard and University of Pennsylvania also adopted financial aid policies similar to Princeton’s’.  Soon other schools like: Williams, Amherst, Connecticut College, Trinity College and Franklin and Marshall also changed their financial aid policies.

Before Princeton and others adopted this financial aid policy, 70% of the lower socio-economic group did not graduate from college.  There are many factors that contribute to this statistic, but the primary factor for not finishing college has been the increased burden of college loans. Schools that cover all tuition need with grants and scholarships instead of loans, have a low percentage of college dropouts.  Students who graduate from these schools can afford to go on to graduate school, because they have little or no undergraduate school debt to pay back.

William and Mary and Syracuse University argue that their financial aid offices determine what a family can contribute, and that the school reserves the right to apply scholarship awards as it sees fit.  The schools’ rationale is that merit scholarships awards change the family’s financial status.

When we called William and Mary to inquire about their financial aid policy, they referred us to their website. In the section titled, “What should I do with my outside scholarship checks?”  The answer is:  “Outside monies may affect your original financial aid award, so we would like to inform you of any changes as early as possible.  You can expect to receive an email with a revised announcement letting you know that we have made changes to your award.”  While this may satisfy the technical definition of  “full disclosure”, it is not something widely discussed during the application process.  It is certainly something not fully understood by most recipients of merit scholarships.

The policy of replacing the institution’s financial award with merit scholarship money is not unusual.  There are many universities who do the same. Some universities will let the student use his award at 50 cents on the dollar.  For example, A Matthew Gaffney scholar was accepted to Wake Forest University in 2013. Her family contribution was $12,000 annually, and when we called to see if Wake Forest would reduce that contribution, the financial aid office told us that she could cover the family contribution with outside scholarships at 50 cents on the dollar.  This means that she would have to earn $24,000 in scholarships to cover her $12,000 debt.  Likewise, it will cost her $12,000 more to go to Wake Forest than the student who can write a check to cover tuition.  Wake Forest is not an exception; there are many other schools that follow the same policy.

What does this mean for the future of merit scholars who also have financial need?  John could not afford the debt-load that would have been required to attend William and Mary, so he decided to go to the University of Connecticut where his $25,000 dollar merit scholarship will cover most of his tuition.  His family will have to pay $3,000 a year.

Edward, fortunately, applied to Franklin and Marshall College in addition to Syracuse.  Using the same financial information that Syracuse did, Franklin and Marshall awarded Edward a full scholarship.  His family contribution will be just $2,000 a year.

Another Matthew Gaffney scholar who applied to Ithaca College received a $28,000 debt for her family contribution that she will have to pay in loans. But when this same student received her financial award from Randolph College, she had a $5,000 family contribution.  When we called Randolph College to see if we could cover this amount with outside scholarships they said, “Oh yes, we encourage that.”

Until colleges and universities discontinue the policy of replacing need-based financial aid awards with merit scholarship monies, the only students who will benefit from merit scholarships will be those students who have no financial need.

Margaret G. Benedict, Ph.D. is a professional educator who has spent over twenty years working with students at the secondary school and university levels.  She is the founder and Executive Director of the Matthew Gaffney Foundation ( and College Preparation Services (, a private college counseling service.

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