In our latest blog, we introduced the basics of need-based aid and merit-based aid, two major ways to bring down the cost of college. Now, let’s take a closer look at how colleges decide who gets what, what’s really happening behind the scenes, and what you can do as a parent to help your student qualify for both.
How Colleges Actually Decide Aid
Every college has its own formula for deciding how much money to offer your student.
Need-Based Aid: Colleges look at your FAFSA (or CSS Profile at some schools) to calculate your Student Aid Index (SAI), which is their estimate of what your family can afford to pay. From there, they decide how much of the remaining “financial need” they’re willing to cover. Some colleges commit to meeting 100% of need. Others might cover only 60–80%.
Merit-Based Aid: Merit aid helps colleges recruit the students they most want. Students with strong grades/test scores and qualities that fit campus goals (e.g., STEM interest, specific majors, leadership, arts, community impact) to strengthen its overall profile.
Red Kite Pro Tip: Submit strategically. If a college is test-optional and your student’s score sits below its median, consider applying without scores to strengthen merit chances tied to GPA and rigor.
Parent Insight: Need-Based Aid Isn’t Just for “Low-Income” Families
A lot of parents assume they won’t qualify for need-based aid, especially if their household income is above \$100K. In reality, many families in that range still receive need-based help. Why? Because eligibility depends on more than income. Colleges look at the total cost to attend, how many kids you’re supporting in college at the same time, and what your family can reasonably cover.
The Overlap Between Need-Based and Merit Aid
A common misconception is that your student will either get need-based aid or merit aid. In reality, a lot of students receive both. Together, they can significantly lower what you actually pay.
Here’s how they can work together:
- Merit scholarships (for grades, leadership, talent, etc.) can lower your out-of-pocket cost right away.
- Need-based aid (grants, work-study, etc.) can then help cover what’s left, depending on the school’s policy.
Important note: Not every college handles this the same way.
- Some colleges will “stack” both types of aid, meaning your student keeps their merit award and still receives full need-based aid.
- Other colleges will lower one type of aid when the other goes up.
Before you accept an offer, it’s okay (and smart) to ask the financial aid office:
“If my student earns an outside scholarship, will that reduce the school’s own scholarship, or will it reduce our remaining cost?”
Getting that answer early can prevent a stressful surprise later.
Red Kite Pro Tip: Compare real cost, not sticker price. A college with the highest tuition isn’t always the most expensive after aid. Look at the net price (tuition minus scholarships and grants) before crossing a school off the list.
How to Strategically Boost Your Student’s Eligibility
Here’s where parents can play an active role before applications go out:
1. Simplify finances before filing FAFSA (and CSS Profile, if required).
- If possible, take care of necessary big purchases or pay down high-interest consumer debt before the FAFSA base year that will be used.
- Keep savings in the parent’s name; student-owned assets are weighed more heavily in aid formulas.
2. Encourage “smart merit” positioning.
- Colleges reward fit and interest as much as raw stats. Campus visits (virtual or in-person), interviews, timely emails, and specific “why us” essays can help.
- Look for competitive or special scholarships (leadership, diversity, talent, department/major) that require a separate short application—these often stack with general merit.
3. Target schools known to be generous.
- Many regional private and mid-tier liberal arts colleges use strong merit to recruit high-achieving students.
- Public universities may offer automatic merit for certain GPAs/test scores. Check your state’s rules and priority deadlines.
Final Thoughts
Your role matters. A few timely actions; filing early, setting alerts for deadlines, and using each college’s Net Price Calculator can meaningfully lower the bill. We’ll keep sending parent-friendly tips; meanwhile, check your student’s Red Kite dashboard for scholarships to bookmark and apply.
Ready to dive deeper? Discover our step-by-step Parent’s Guide to Paying for College.
