Updated November 2020
In the opening paragraph of the NAIS-recommended Guidelines for Merit Awards/Tuition Remission, it is stated that "NAIS reaffirms its belief that the purpose of a financial aid program is to provide monetary assistance to those students who would not be able to attend an independent school without such assistance." It goes on to state that this approach to offering assistance assures that "schools can most equitably distribute need-based financial aid funds to children of qualifying families."
While NAIS feels schools should extend financial assistance only to those who demonstrate they are unable to pay the full tuition (and other school-related costs), it is recognized that many schools offer merit programs. Because, in part, of difficulties schools face funding their aid programs sufficiently, relatively few schools have merit aid programs (in 2020-21, one-third of members report offering merit aid, compared to over 98 percent reporting they offer need-based aid). Nevertheless, NAIS has noticed that discussions about merit aid are occuring more and more frequenty at independent schools.
NAIS data show that the average merit award given has increased by about 36 percent since 2010-11 (from about $4,800 to about $6,500) while the number of schools offering merit aid has grown nearly 40 percent. This suggests an increasingly competitive market among independent schools, amid increasing pricing and affordability concerns for low- or no-need families.
In the opening paragraph of the NAIS-recommended Guidelines for Merit Awards/Tuition Remission, it is stated that "NAIS reaffirms its belief that the purpose of a financial aid program is to provide monetary assistance to those students who would not be able to attend an independent school without such assistance." It goes on to state that this approach to offering assistance assures that "schools can most equitably distribute need-based financial aid funds to children of qualifying families."
While NAIS feels schools should extend financial assistance only to those who demonstrate they are unable to pay the full tuition (and other school-related costs), it is recognized that many schools offer merit programs. Because, in part, of difficulties schools face funding their aid programs sufficiently, relatively few schools have merit aid programs (in 2020-21, one-third of members report offering merit aid, compared to over 98 percent reporting they offer need-based aid). Nevertheless, NAIS has noticed that discussions about merit aid are occuring more and more frequenty at independent schools.
NAIS data show that the average merit award given has increased by about 36 percent since 2010-11 (from about $4,800 to about $6,500) while the number of schools offering merit aid has grown nearly 40 percent. This suggests an increasingly competitive market among independent schools, amid increasing pricing and affordability concerns for low- or no-need families.
Two Things to Consider
- Provide merit awards as a means of supplementing your need-based aid funds. With this approach, donors who are more willing to build resources for athletes, musicians, or artists can have that opportunity. At the same time, the school maintains its primary commitment to funding need-based aid, even while recognizing special achievement or talents. For example, Jane, a soccer player, demonstrates need for a $3,000 financial aid award. This full award can be granted with funds the school allocates from its operating revenue. But with a "Trustee's Scholar-Athlete Award" built from donated funds, any or all of that $3,000 can be replaced by this merit scholarship, freeing an extra amount of funds from the general aid pool to assist others in need.
- Always remain true to the mission of your school. Be careful to examine the reasons why this may be the time for building merit awards. Is it because of competition for students? Is it because parents are "shopping" for schools? Do parents confuse terminology and think a need-based award is a scholarship? Is it to stand by a principle of recognizing talent with monetary awards? What are the goals of the program? Would establishing a merit program be consistent with the philosophy of your need-based program? Will merit programs allow you to accomplish a goal you're not currently meeting? How will the school handle a possible perception of "buying" students, presumably away from other schools?
Is Merit Aid Ever a Good Idea?
To be clear, this article isn't intended to assert that NAIS is against all forms of merit-based aid forever. What schools should be careful to plan against, though, is less-than-fully-funded need-based aid. A large concern is that as needy families scramble to find funding to make attendance possible, schools are extending awards to those who do not need them in order to attend. If the school's need-based program isn't yet fully funded, schools should first aim to use any extra funds for "discounts" to fund the need-based program. Once that need-based source is funded and sustained, then finding funds for merit aid programs that address a recruitment/retention issue or reward (truly, reward) special talent or promise, suggests best practice.
Also, non-school, private donor-supported funds afford opportunities to create merit aid programs that do not represent a conscious choice to NOT to add funds to a need-based program. It's using donor money to do that. In these cases, schools must be clear and careful about the degree to which donors have control over who gets selected, how the students are communicated with, and reporting criteria the donor might require.
If a school is offering an award that is truly based on merit, then it makes the most sense for the awards to recognize a very specific talent, skill, or promise (such as science, art, or leadership) where the applicant has demonstrated that talent, skill, or promise. That's the ultimate definition of merit awards. Similar to need-based grants, the merit must be demonstrated and the rules/criteria for defining that must be clear and obvious to applicants and decisionmakers.
Generally, the foundational strategic issue isn't really whether is right or wrong for schools to offer merit aid; it's whether the school has consciously decided that it's money is being used to help those who don't need it, while those who do need it aren't able to gain access to funds.
Whatever your school decides, it is NAIS's hope that the operation of your merit program does not result in decreased or stagnating support for your need-based program. Furthermore, NAIS hopes that the trend of increasing use of merit aid does not create unethical practices in schools' competition for students. By focusing commitments on need-based programs, all students and all schools are best served.
Also, non-school, private donor-supported funds afford opportunities to create merit aid programs that do not represent a conscious choice to NOT to add funds to a need-based program. It's using donor money to do that. In these cases, schools must be clear and careful about the degree to which donors have control over who gets selected, how the students are communicated with, and reporting criteria the donor might require.
If a school is offering an award that is truly based on merit, then it makes the most sense for the awards to recognize a very specific talent, skill, or promise (such as science, art, or leadership) where the applicant has demonstrated that talent, skill, or promise. That's the ultimate definition of merit awards. Similar to need-based grants, the merit must be demonstrated and the rules/criteria for defining that must be clear and obvious to applicants and decisionmakers.
Generally, the foundational strategic issue isn't really whether is right or wrong for schools to offer merit aid; it's whether the school has consciously decided that it's money is being used to help those who don't need it, while those who do need it aren't able to gain access to funds.
Whatever your school decides, it is NAIS's hope that the operation of your merit program does not result in decreased or stagnating support for your need-based program. Furthermore, NAIS hopes that the trend of increasing use of merit aid does not create unethical practices in schools' competition for students. By focusing commitments on need-based programs, all students and all schools are best served.