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Understanding Scholarships and Financial Aid Packages

By Nat, IvyWise College Admissions Counselor

One of the most common questions I get is, “where is the best place to look for scholarships to help pay for college?” This is a flawed question to some extent because scholarships are difficult to come by, apply for, and win. Furthermore, the students who qualify to receive the most lucrative scholarships are often competitive at schools that, when admitted, offer generous financial aid packages. There is so much misinformation around financial aid because many of the terms used are nuanced and “coded.” I want to take some time to go more in-depth and decode some of the language around financial aid.

Understanding What ‘Need-Blind’ Means

Our country has a number of “need-blind” schools, which means that the institution doesn’t consider your ability to pay when making a decision. Be careful here because being need-blind in the admissions process oftentimes does not mean that a school meets 100% of demonstrated need.

For example, when I worked at NYU, we read applications need-blind, which meant we didn’t have a good sense of how many students we admitted needed financial aid. We had a finite financial aid budget and would divide the money out accordingly to the students who qualified for financial aid.

When all of the acceptances and financial aid packages were sent, we barely met the demonstrated need of the accepted class, and we were only able to meet about 39% of their demonstrated need on average — much of it was with crippling loans. Because we didn’t meet the full need, those families that qualified for financial aid often had to take on additional parent-plus loans to meet the difference, which meant we had a large number of students graduating with $100K or even more than $200K of debt.

Understanding What ‘Need-Sensitive’ Means 

On the flip-side, I started my admissions career at Skidmore College, which was need-sensitive during the reading process. The ability to pay (or not be able to pay) factored into the applicant’s ability to be admitted. While this was a tough reality as a young admissions reader, when we sent out admissions decisions and corresponding financial aid packages, admitted students were rewarded with generous financial aid packages and had small loan amounts at graduation.

One common thread regarding those two different institutions I worked for; both use what we refer to as financial aid leveraging in their financial aid packages. This means the stronger the applicant profile, the better the financial aid package would be. This might manifest in fewer loans and more grants for a top-rated applicant, and more loans and fewer grants for someone who was admissible but did not score as well in the admissions rubric.

While our country has thousands of colleges and universities, only a small percentage of the colleges here meet 100% of demonstrated interest, which is a coded term in itself. If an applicant qualifies for $25K of financial aid, a college could, in theory, give that student $25K of loans each year and advertise that they meet 100% of need.

Scholarships vs. Financial Aid 

I think it’s a better use of time to research and apply to the schools that meet 100% of need compared to spending time looking for scholarships to help pay for college. I think there is merit in applying for outside scholarships, but that step should normally come after a student has applied to one of the roughly 70 or so colleges that meet 100% of need.

While the number of colleges that meet 100% of need is slowly growing each year, I typically see the newest colleges to reach this milestone are only able to do so with large loan amounts, which is not helpful in my opinion.

The colleges with the most robust endowments and generous financial aid programs can meet 100% of need, and oftentimes, without any loans! Colleges like Bowdoin College have been at the forefront of aiding students generously, allowing them to have very little to no debt at all after graduation.

Applying for Financial Aid

A typical financial aid package has three components:

  • Grant: money that is gifted to the applicant and does not need to be paid back
  • Loan: money that is given to the applicant that does need to be paid back
  • Work study: money that is earned while working a few hours a week on-campus

A small handful of colleges take out the loan component of the financial aid package, as mentioned above, which leaves students with a large grant amount and then a small stipend through their work-study job.

It is important to understand that the government decides who qualifies for financial aid. Most of the time, what the government thinks an applicant qualifies for is quite different from what the applicant thinks they should qualify for. It is also crucial to ascertain what percentage of need a college would meet, and more importantly, how to get a sense of how much of that need met was through grants and how much of it was generally in loans.

This information is easy to data mine through searching for a specific college’s Common Data Set and then looking at section H. I also showed families how to use the data collected by the government and organized nicely at CollegeNavigator.gov. These two online resources can give families a sense of the quality of the financial aid packages at individual schools.

Despite all of the nuance and coded language in financial aid, I still believe that most students are far better off applying to schools that have generous financial aid programs, especially considering that most of the relevant data to ascertain the strength of a financial aid package is publicly available. I still encourage students to apply for outside scholarships but view that as a supplement to applying to the right colleges in the first place.

If you’re looking to learn more about comparing scholarships and financial aid, a knowledgeable admissions counselor can provide personalized guidance. Get in touch with us today to find out how you can receive support throughout every step of your application journey, including financial aid.

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