by Kim Clark

Many students apply for merit scholarships because they prefer financial rewards for their hard work, or they fear their families make too much money to qualify for aid awarded based on their financial "need." But college aid experts say that the tough economy, new federal rules, and evolving college financial aid strategies are blurring the distinction between scholarships awarded on "merit" and grants awarded because of a student's supposed financial need. A growing number of colleges now award "need-based" aid to students from families earning six figures, for example.

The experts say there are eight basic rules to maximizing your chances for merit aid over your college career, and making sure you don't leave any other kind of aid on the table.

1. Fill out the FAFSA.

New federal rules allow college aid officials to award need-based aid to students whose parents earned good salaries last year but have been recently laid off. And colleges are allowed to make accommodations for a family's unique circumstances, such as high medical bills. Besides, just by filling out the form, you'll qualify for a low-cost federal student loan of at least $5,500.

2. Apply where you'd be at the top.

Apply to at least a few colleges you'd like to attend where your grades put you in the top 25 percent of the student body. Many college admissions and aid officers "look at the strength of their applicant pool. If you are in the top quartile, there is a very good chance they will try to lure you with merit aid," says Peter Van Buskirk, author of The Admission Game and the former head of admissions at Franklin and Marshall College in Lancaster, Pa. Most colleges list their student profiles on their websites. The information is also available via U.S. News's Best Colleges Premium Online Edition, or at the Department of Education's Navigator website.

3. Apply to some colleges that offer generous need-based aid.

Harvard, for example, has raised its definition of need, and now awards "need-based" scholarships to students from families who earn, say, $180,000.

4. Look for merit scholarships.

Search the college's website, or sites like, to see if there are any specific merit scholarships for which you might qualify.

5. Ask about renewal terms.

Some merit programs set high renewal grade hurdles so that some students won't be able to qualify for future years, thus saving the program money. Most students don't realize how much harder college is than high school, and that grades typically drop by as much as a full point in freshman year. If your goal is to become a doctor, and your merit grant requires you to keep a 3.5 grade point average, you might find yourself swapping tough chemistry classes for easier courses in an effort to keep your grant, thus sacrificing your dream, warns Scott Stensrud, vice president of enrollment management at Hawaii Pacific University . Likewise, if you receive, say, a band scholarship, you'll probably have to play in the band to keep the money, even if you discover sophomore year that you would rather sing in the glee club. For more flexibility, concentrate on scholarships with easier renewal terms. Need-based aid, for example, is usually renewed as long as you pass your courses. It is generally only cancelled if your family's financial circumstances improve.

6. Ask about the number of years you can collect the merit scholarship.

Some programs only award four years of scholarships, even though it takes most students five years (or more) to finish college, Stensrud notes.

7. Before choosing among colleges, compare net prices.

Subtract grants and scholarships from the total cost of attendance (including tuition, fees, room, board, books, and transportation). Sometimes the college offering the biggest merit scholarship turns out to have the highest net price because its tuition is higher.

8. Negotiate.

If you have received admission letters from two or more universities, and your first choice has a higher net price than a competitor, "Don't be afraid to 'bargain,' " says Don Heller, director of the Center for the Study of Higher Education at the Pennsylvania State University . "It's a not-so-well-kept secret that some institutions may be willing to match a merit grant offered to the student by another school," he adds. But the schools that do consider bargaining typically only match offers from colleges they consider as good or better than their own. Carnegie Mellon University , for example, doesn't generally try to match awards from much lower-ranked schools. Also, students generally only have negotiating leverage before they send in their deposits May 1.

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8 Rules for Maximizing Merit Aid - College Scholarships