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.