Lucy
Where does merit scholarship money come from?
Every college I applied to (and some I didn't) has offered me incoming freshman scholarships. Why don't they just lower their cost instead of giving scholarship money? Where does that money come from anyway? Are they just eating the cost or is someone actually giving the money for us? #scholarships #college
2 answers
Kathryn Kembitzky
Kathryn’s Answer
Colleges have a lot of different motives for offering scholarships.
First, there is an entire psychology around discounts. Numerous psychology and economic papers can be found on this, but the overarching them is people like feeling like they are saving money. For example: if something says "original price $80, on sale for $30." On average the person will feel better because they "saved" $50 and feel as if they got something worth more vs. if they bought the same product at normal price of $30. The end result is the same...someone spent $30 on the product, but the attitude/feeling is very different. I know plenty of friends who got accepted into expensive schools and said well I'm getting a 30% scholarship. The end result was still more expensive than a state school, but they felt more accomplished and ultimately picked the more expensive school.
Second colleges although each one has standards for admission, colleges tend to over accept students knowing not all students will accept. When there is a student who they want to attract to accept the offer they may provide a scholarship. Think college sports recruiting... they offer the best athletes scholarship money so they athlete accepts and joins their school. Merit scholarships are typically done because of academics or something specific you bring to add to the university. Colleges want to attract smart, successful students because it will improve their academic standing.
The money itself can come from a variety of sources. Some merit scholarships are provided by donors/alumnis. I earned a scholarship in undergrad that was set up by an alumni who's spouse recently passed away. She was an econ major and he set up a scholarship in her name for women in economics. Other scholarships, more that are widely used by the university (example: if you had a GPA in HS > 3.5, you automatically receive 20% of tuition) is the university's way of attracting a specific student.
Most scholarships provided by a university have a blurb on the university's website. If you have specific questions I would start there or you can always reach out the admission/financial aid office and ask for clarification. Additionally, if you accept an offer at a school with one of the merit scholarships - make sure you understand any rules or obligations needed to maintain the scholarship! For example: one scholarship I was on required me to take a minimum of 15 credit hours a semester or I would not qualify for the scholarship.
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Paul Gullatte
Paul’s Answer
Congratulations on the scholarship offers! You should be happy because not everyone is fortunate enough to receive free money.
Colleges do not lower tuition across the board because, like any business, they have expenses and sometimes they have to raise tuition in order to remain profitable. Now some may argue that may not be the only reason they raise tuition but that's a debate for another day.
Depending upon the school, scholarship money may come from a number of sources. I believe the most popular sources are alumni donations and fund raisers. Colleges may eat the cost of the scholarship so that more high achieving students will be enticed to attend their university but I believe this is rare as they often have enough money from donations and fund raisers to prevent this.
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