Merit Scholarships and Financial Aid at Private Colleges

[Pages:7]Merit Scholarships and Financial Aid at Private Colleges

In this lesson, you'll learn ...

? the realities of getting price discounts at private schools. ? about the financial aid practices of private colleges. ? about the merit aid practices of private colleges.

College Is Primarily a Buyer's Market

At most private schools, contrary to conventional wisdom, college is a buyer's market and not a seller's market. Families enjoy more choices than they realize and most private institutions have to compete fiercely by dispensing merit scholarships to fill their freshmen slots. The main exceptions are the most selective colleges and universities, such as Ivy League institutions.

Certain types of private institutions will provide nearly all their students with a price cut. In contrast, the most elite institutions will make many or all of their high-income students pay full price. According to the latest survey of the National Association of College and University Business Officers, 88% of students attending private colleges and universities don't pay the sticker price. The average tuition discount is 55.5%, which is an historic high. Families will increase their chances of capturing price breaks if they look at the type of institutions that are most likely to offer them.

Here is the breakdown, courtesy of the well-regarded NACUBO survey, of the three main types of fouryear private institutions and the percentage of freshmen who receive a discount (scholarships and/or grants) from each one:

? Research universities 68% ? Master's level universities 86% ? Colleges 91%

1

LMyenrnitOS'cShhoaluargshhnipesyand Financial Aid at Private Colleges

Research Universities

If you keep in mind that colleges are businesses, you can understand why research universities don't offer nearly as many price breaks as their competition. This category includes the best-known higher-ed institutions where the primary focus is first and foremost on professor research and secondly on educating PhD students, who are tasked with doing the majority of undergraduate teaching. The third priority of research universities is educating undergrads. Among the private schools in this category are the Ivies, MIT, Duke, University of Chicago, Stanford, Georgetown, Vanderbilt and Rice.

In general, prestigious research universities are the only schools that can get away with offering no merit awards or dispensing very few merit scholarships because they have little or no trouble filling their freshmen slots every year. Because they have so many students paying full price, these schools can offer better financial aid to those who need help.

Research universities are in this enviable position because they are perceived (rightly or wrongly) as the best higher-ed institutions for undergrads. Research universities that score extremely high in U.S. News & World Report's college rankings don't have to try as hard to attract top students. So many high-income students want to attend these highly rated schools that paying a quarter million dollars or more for a bachelor's degree won't discourage them. These students are referred to in the higher-ed industry as "full pays" and are highly coveted.

You may be shocked when you see just how many students do pay full price at the following sampling of prominent research universities. I pulled these statistics from the Department of Education's College Navigator site.

For instance, as you'll see in the following chart, 37% of students at Tufts received need-based aid, which means a whopping 63% paid the full sticker price of more than $68,000!

Percentage of students receiving grants/scholarships from leading research universities

Tufts University (MA)

37% Johns Hopkins University (MD)

48%

Wake Forest University (NC)

40% Emory University (GA)

49%

Georgetown University (DC)

41% Stanford University (CA)

50%

Duke University (NC)

44% Yale University (CT)

50%

Brown University (RI)

46% Washington University, St. Louis (MO)

51%

Columbia University (RI)

46% Northwestern University (IL)

54%

New York University (NY)

46% Caltech (CA)

55%

Dartmouth College (NH)

47% Harvard University (MA)

56%

2

Merit Scholarships and Financial Aid at Private Colleges

When you see private schools that offer institutional grants to a relatively low percentage of students, it will usually mean one of two things:

1. The school only gives out need-based financial aid. 2. The school awards very few merit scholarships to high-income students.

WHAT DOES THIS MEAN?

For families looking for need-based aid Private schools that provide little or no merit scholarships can be excellent institutions for smart students who require financial help to attend college. A middle-class or disadvantaged student who gets into a school like Harvard, Johns Hopkins, University of Pennsylvania and Caltech should receive an excellent financial aid package. Even upper-middle class students can qualify for healthy amounts of need-based aid at some of these schools.

Don't assume, however, that all schools that provide little or no merit aid will automatically provide excellent need-based aid packages. In general, the research universities near the top of U.S. News' rankings will provide better aid than their peers farther down the list. Even the most elite universities, however, can tweak their own internal aid formulas in ways to make their aid policies more or less generous. One way that they can do this when calculating financial aid is to assess the full amount of a family's home equity or not consider it at all.

tip: When evaluating any college or university, it's extremely important that parents use an institution's net price calculator. See the lesson entitled, Using Net Price Calculators When Seeking the Best Prices, to learn more about this valuable resource.

For families looking for merit scholarships High-income students who attend elite research universities and the most highly ranked liberal arts colleges will usually pay full price or close to it. This reality can pose a dilemma for smart, wealthy students who are aiming for elite schools, but whose parents have not saved enough to pay for a school that costs $65,000 a year or more.

Affluent families, who find themselves in this predicament, should expand their search and look for schools that will provide wealthy students with merit scholarships and most private and public institutions do.

Plenty of well-off parents unfortunately choose other options when their children get into trophy schools that they believe merit extreme financial sacrifices. They end up taking actions such as borrowing large amounts for college, raiding their retirement accounts and/or dipping into college accounts designated for a younger sibling(s). Some parents have even sold their home to enable their children to attend their dream schools, which is not a smart idea!

3

Merit Scholarships and Financial Aid at Private Colleges

Master's-Level Universities and Colleges

The schools that provide most or even all freshmen with price discounts will typically be colleges, as well as master's-level universities. Unlike universities, colleges are typically focused on educating undergraduates exclusively, and can offer small classes (there are few if any lecture halls), professor mentors, and a more intimate style of learning. Students who graduate from liberal arts colleges are more likely to attend graduate school than students who attend research or master's level universities.

Master's level universities have master's degree programs, but few if any doctoral degree programs. At some of these schools, students will have a better chance connecting to professors than at research universities where professors are more likely to consider themselves researchers and not teachers. Master's level universities can serve as a hybrid between a research university and a college.

People often don't know what colleges are and those that give these schools any thought at all probably mistakenly assume that these institutions must be small because few students want to attend them. Colleges and master's level universities, even those that draw students from across the country, are mostly only known in their own state or region.

In contrast to research universities, colleges and master's level universities have to try harder to fill their freshmen slots because of the lower visibility. And this often means giving nearly everyone a price break.

Below are some examples of master's-level universities and the percentage of freshmen who receive scholarships and/or grants.

Percentage of students receiving scholarships/grants from master's-level universities

Duquesne University (PA)

100% Regis University (CO)

98%

Marquette University (WI)

100% Bradley University (IL)

97%

Rockhurst University (MO)

100% University of Portland (OR)

97%

University of Dallas (TX)

100% Seton Hall (NJ)

96%

Xavier University (OH)

100% Trinity University (TX)

93%

Clarkson University (NY)

99% Butler University (IN)

91%

Creighton University(WI)

99% University of Tulsa (OK)

87%

Drake University (IA)

99% University of Denver (CO)

81%

St. Catherine University (MN)

99%

4

Merit Scholarships and Financial Aid at Private Colleges

Colleges

There are some elite colleges, such as Amherst, Williams and Swarthmore, which embrace the same type of aid policies as top research universities (little or no merit aid). The liberal arts colleges in this category enjoy excellent rankings in U.S. News & World Report. If your child is aiming for the most prestigious liberal arts colleges and they won't qualify for need-based aid, they should expect to pay full price.

Here are some liberal arts colleges that provide little or no merit aid, but provide very good to excellent need-based aid:

Percentage of students receiving scholarships/grants from liberal arts colleges

Bates College (ME)

41% Claremont McKenna College (CA)

49%

Colby College (ME)

41% Davidson College (NC)

55%

Claremont McKenna College

42% Swarthmore College (PA)

49%

Middlebury College (VT)

42% Williams College (MA)

53%

Colorado College

44% Amherst College (MA)

57%

Most colleges, however, must dispense awards to most of their freshmen.

Below are examples of liberal arts colleges and the percentage of freshmen who receive scholarships and/or grants. On the list, I included my daughter and son's alma maters (Juniata College and Beloit College):

Percentage of freshmen receiving scholarships/grants from liberal arts colleges

Juniata College (PA)

100% Kalamazoo College (MI)

98%

Austin College (TX)

99% St. Michael's College (VT)

98%

College of Wooster (OH)

99% Willamette University (OR)

98%

Lake Forest College (IL)

99% Roanoke College (VA)

97%

Linfield College (OR)

99% Eckerd College (FL)

95%

Moravian College (PA)

99% Westminster College (UT)

95%

Beloit College (WI)

98% Rhodes College (TN)

93%

Denison University (OH)

98% Manhattan College (NY)

91%

5

Merit Scholarships and Financial Aid at Private Colleges

WHAT DOES THIS MEAN?

Affluent families, who don't want to pay a quarter million dollars or more for a bachelor's degree or who haven't saved up nearly enough money, should broaden their search beyond elite research universities and elite liberal arts colleges and take a look at master's level universities and colleges. Master's level universities and colleges often don't have as high a sticker price as the best-known research university and they routinely discount their prices.

These families should also take a look at public universities in their own state and elsewhere. You'll learn more about state institutions in the chapter entitled, Merit Scholarships and Financial Aid at State Universities.

The Next Step

Of course, the percentage of freshmen who receive a price break doesn't tell the entire story. There are other numbers that families need to look at.

Important statistics for all prospective students

? Cost of attendance ? Percentage of freshmen receiving price break

Important statistics for students looking for need-based aid

? Percentage of financial need a school typically meets ? Percentage of students who get their full financial need met ? Size of average financial aid award

Important statistics for affluent families looking merit awards

? Size of average merit scholarship ? Percentage of students who receive merit awards ? What the requirements are to keep a merit scholarship

You'll learn how to obtain all of these figures in the following two lessons:

? College Board Tool: Evaluating School Generosity ? COLLEGEdata Too: Evaluating School Generosity

6

Merit Scholarships and Financial Aid at Private Colleges

Bottom Line

1. While many families worry that only "A" students receive scholarships, this is clearly not true. At most private schools, the price tag is irrelevant for almost everybody. Students with the highest academic profiles, however, typically receive the best awards.

2. High-income students who want to attend private, elite research universities are likely to pay full price or close to it. Wealthy families who can't afford a steep tab for a private research university should throw a wider net when looking for schools.

3. Private schools that provide little or no merit scholarships to high-income students can be excellent institutions for smart students who require financial help to attend college.

4. Just because a school gives everyone or nearly everyone a price break doesn't mean that these will be the most affordable schools. Other factors are at play including the school price, the size of scholarships and how generous or stingy a school's need-based aid policy is.

7

Merit Scholarships and Financial Aid at Private Colleges

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download