Financial Aid

Need-based aid is offered according to the financial need of a student. Generally colleges at the "top of the pecking order" dispense aid solely in terms of need using "fairly predictable formulas", according to one source. The Chronicle of Higher Education reported that elite colleges had made little progress in helping poor students get need-based aid, and that less than 15% of undergraduates at the nation's 50 wealthiest colleges received Pell Grants in 2008-2009, which are offered on the basis of need to promising yet less affluent students. According to one source, about 30 elite universities have "coffers deep enough to meet all student need" and consequently only offer need-based aid.

Merit-based aid is scholarships and grants awarded to top academic performers or others with special talents. One report suggested that academic scholarships tended to be few, and were usually awarded by the admissions office and are "highly competitive". Another report suggested that most colleges use merit scholarships, based on high scores or grades or other accomplishments, to lure students away from a competing college. One view is that most colleges award aid using a mix of both. Further, student loans can lessen the immediate difficulty of large tuition bills but can saddle a student with debt after graduation; in contrast, grants and scholarships do not have to be paid back.

According to Lynn O'Shaughnessy, schools trying to climb the prestige ladder use merit-based scholarships to attract top students to boost their rankings in the US News guidebook. She elaborated that as a school's "stock" rises, high-performing students start attending in greater numbers, and consequently the college can "ratchet back on the merit aid to wealthy students" and shift funds towards "need-based financial aid". Elite schools such as the Ivies don't give merit scholarships, according to two reports. Another tool is to use the College Board's expected family contribution calculator that can give families an idea of how much college will cost, but not for any particular college. According to US News, 62 out of 1,137 colleges, which responded to a survey, claimed to meet 100% of the demonstrated financial need of students. "Demonstrated financial need" is the gap between the "expected family contribution" (based on tax information, family size and assets) and the cost of attendance (tuition and fees, dormitory, food expenses, and so forth.)