How do SAT scores affect financial aid?

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Getting ready for college is a complicated process. To make matters worse, the question that often follows "Where are you going?" is "How are you going to pay for it?" Depending on the college or university you choose, the average cost of a year of tuition, fees, and room and board could range from $14,000 at a public university to more than $50,000 at some private schools. Just when you've beaten the odds and gotten accepted, the numbers game starts again.

That's where another important number could come into play ­-- your SAT score. Of course it plays an important role in whether or not you're accepted to the school of your dreams, but does it affect your financial aid package? It can, but this isn't always the case.


Every school has financial aid programs designed to help worthy students attend and to encourage diversity, regardless of their socio-economic status. These aid programs are generally need-based or merit-based. Need-based financial aid is determined by tuition costs minus the expected contribution by the student's family; a student's individual aid program may include a combination of grants, loans and student jobs. Merit-based financial aid is awarded for academic performance or accomplishments. A higher SAT score can help you earn merit-based aid, but once you're accepted into a school, your SAT score shouldn't be of much concern.

Through merit-based scholarships, schools seek out students with special talents or promise, whether they excel in music or dance, athletics or academics. High SAT scores can help a student to be considered for academic financial assistance.

According to a recent study by the National Association for College Admission Counseling (NACAC), nearly four out of five colleges use standardized test scores as an eligibility criterion for merit aid. The study also reported that colleges are continuing to increase the amount of merit aid offered to students at the expense of need-based aid. In 1994, colleges and universities overall reported that 27 percent of institutional aid funds were merit-based and 66 percent were need-based; in 2007, 43 percent reported their aid funds were merit-based, compared to 49 percent need-based [source: NACAC].

Many public and private schools offer academic scholarships that require a minimum SAT score to even be considered; scholarship amounts range from $1,000 a year to full tuition and board. For example, the University of Georgia's Foundation Fellow scholarship requires potential recipients to have a minimum score of 1400 on the SAT and a 3.75 GPA; but that's not all. Activities, honors, recommendations and a personal interview also factor into the selection equation [source: UGA].

Read on to learn about how high test scores may lead to recognition by the National Merit Scholarship program.



About the National Merit Scholarship Program

One example of a merit-based program that uses SAT scores -- or in this case the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQ) -- as a main selection criterion is the National Merit Scholarship Program.

This program is a competition for recognition and merit-based scholarships awarded by the National Merit Scholarship Corporation (NMSC), a non-profit organization. To participate, a student must take the PSAT/NMSQT in a specified year as a high school student planning to enroll in college and must be a U.S. citizen or permanent resident.


Here's how the National Merit scholars are selected out of all the high school seniors in the U.S.:

  1. 1.5 million entrants. The National Merit scholarship program uses the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQ) test to screen more than 1.5 million entrants.
  2. 50,000 high scorers. Each year, a qualifying score is determined to select the top 50,000 highest scorers on the PSAT, which is usually taken at the beginning of a student's junior year. These students have the opportunity to have their scores sent to two colleges or universities of their choice by the NMSC.
  3. 16,000 semifinalists. Among those 50,000 students, 34,000 are designated "Commended Students," and the remaining 16,000 are named National Merit semifinalists. They are the highest scoring entrants in each state and will receive application materials to apply for National Merit Scholarships.
  4. 15,000 finalists. Next, semifinalists who meet academic and other requirements advance to Finalist standing. All National Merit Scholarship winners are selected from this group.
  5. 8,200 Merit Scholarship winners. The NMSC selects 8,200 Merit Scholars winners who will receive one of three types of scholarships: National Merit scholarships, corporate-sponsored scholarships, or college-sponsored scholarships.
  6. 1,500 special scholarships. Scholarships provided by corporate sponsors are also awarded to students who qualified as high scorers but weren't selected as finalists [source: NMSC].

The scholarship program was started in 1955 and has recognized 3 million students and provided more than 335,000 scholarships worth more than $1.3 billion. The program has been very successful in achieving its goal to honor and encourage academically talented high school students.

Recently, however, public concern about standardized tests and their importance in college admissions led the NACAC to conduct a study about the use of standardized tests. In their report, they recommended that minimum PSAT scores should no longer be used to determine eligibility for National Merit consideration. The commission suggests that a student's entire school performance should be evaluated, not a single score on a standardized admissions test [source: NACAC].

While the requirements for this particular program have not been changed, the NACAC's recommendations may have a much more far-reaching effect on how SAT scores impact merit-based financial aid. For today's high school students, it's important to develop a well-rounded profile: Challenging course work, good grades and achievements in extracurricular activities may come into play even more than SAT scores.


Lots More Information

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  • Kirp, David L. "Our Two Class System." The American Prospect. October 26, 2009. (Feb. 4, 2010)
  • "Report of the Commission on the Use of Standardized Tests in Undergraduate Admission." National Association for College Admission Counseling. September 2008.
  • Andriotis, AnnaMaria. "Decoding the FAFSA: 6 Steps to Boost Financial Aid." Smart Money. January 6, 2010 (Feb. 4, 2010)
  • Stern, Linda. "How to Afford College Now." Newsweek. August 12, 2009. (Feb. 3, 2010)