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Financial Aid Myths: Why Most Super Selective Colleges Don’t Offer Merit, and Who Does
When families think about financial aid, assumptions often take the place of facts. Parents expect that good grades, strong test scores, and standout extracurriculars will automatically bring scholarships at any college. But the truth is that aid looks very different depending on where a student applies. Highly selective colleges tend to focus entirely on need-based aid, while many broad-access colleges use merit aid as their main tool to recruit students.
Let’s break this down by looking at three of the most common myths families believe—and the reality behind each one.
Myth 1: Every college offers merit scholarships.
Reality: The most selective colleges in the country don’t award merit aid at all.
Super selective schools like Stanford, Rice University, and Duke University focus their aid budgets on meeting demonstrated financial need. They have no reason to use merit awards because their applicant pools are already overflowing with highly qualified students. For families who qualify for need-based aid, these schools often provide generous support. For those who don’t, the cost will be close to the full sticker price.
This can be surprising for parents who assume their student’s academic record will automatically be rewarded. At highly selective colleges, admission itself is the reward—financial aid is reserved for those with demonstrated need.
Myth 2: The highest-priced colleges are always the most expensive to attend.
Reality: Colleges with high sticker prices often bring costs down through large merit awards.
Schools with broader admissions pools use merit aid as a powerful incentive. Southern Methodist University (SMU) and Baylor University are two well-known examples. Both schools award significant merit scholarships that can reduce costs by tens of thousands of dollars for many admitted students.
The University of Miami takes a similar approach. While its published cost is among the highest in the country, Miami frequently offers substantial merit scholarships to high-achieving applicants. Families often find the final price to be far lower than they expected at first glance.
Myth 3: All financial aid packages are structured the same way.
Reality: Many colleges sit in the middle, blending need-based and merit aid in unpredictable ways.
Some schools don’t fit neatly into the “need only” or “merit heavy” models. They provide partial need-based coverage while also distributing merit scholarships. Hampshire College in Massachusetts is a good example. It awards some need-based aid, but it also uses merit selectively. Two students with similar profiles might walk away with very different financial packages.
This mixed model creates opportunities but also adds uncertainty. Families need to pay closer attention to each school’s aid philosophy to avoid surprises.
Merit scholarships are not a guarantee, and the type of aid your student receives depends heavily on the type of college. At the most selective schools, expect generous need-based aid but no merit. At broad-access schools, expect wide use of merit scholarships that can dramatically cut the cost. And at schools in the middle, expect a mix of both strategies, often less predictable.
Families can avoid the disappointment of unmet expectations by learning how each college approaches financial aid before applying. Using net price calculators, reading financial aid policies, and asking direct questions during the process will help reveal the reality behind the myths. With clear eyes, parents can build a list that balances ambition and affordability—without banking on scholarships that may never come.
Where This Data Comes From
Each year, our colleagues Jennie Kent and Jeff Levy analyze data from the Common Data Set, a standardized report that colleges and universities across the U.S. complete annually. It includes admissions statistics, financial aid details, student demographics, and more.
By comparing these reports across hundreds of schools, Jennie and Jeff uncover trends that are easy to miss when families look at colleges one by one. Their analysis highlights a clear connection between a school’s selectivity and the type of aid it offers.