Merit scholarships get talked about as a reward for a strong application -- and your stats do set the ceiling on what you're eligible for. But the size of the offer a specific school puts in front of you is shaped by something else entirely: how much that school needs your enrollment specifically, which is a yield question, not a "how good is this student" question.
Merit aid is an enrollment-management tool, not just a reward
The National Association for College Admission Counseling (NACAC) frames this plainly in its own research on institutional aid: colleges have "long used merit-based aid awards as a strategy to attract and enroll academically competitive students," and institutions face real pressure "to use financial aid as an enrollment management tool" rather than purely a need-based access lever. That shift is measurable over time -- NACAC's data shows the share of students receiving merit-based aid grew by almost 20% over the last 20 years at both public and private institutions, while need-based aid growth was flat or declining over the same period at private schools specifically.
The number behind this: how much schools are actually discounting
The clearest evidence of how far this has gone is the tuition discount rate -- the share of gross tuition revenue private colleges give back as institutional grant aid. For the 2024-25 academic year, NACUBO's own annual survey found the average discount rate for first-time, full-time freshmen hit a record 56.3% -- meaning for every dollar of sticker-price tuition, participating schools gave back roughly 56 cents in grant aid on average, mostly to compete for the incoming class they wanted. That's not a niche practice at a handful of struggling schools; it's now the typical arrangement across private higher education.
Why lower-yield schools discount harder
The connection to yield is direct: a school confident that most of its admits will enroll regardless of price -- the kind of school sitting at the top of our yield-rate ranking, where MIT, Stanford, and Harvard all clear 80%+ -- has far less need to compete on price to fill its class. A school further down that list, or well below the national 25.7% average yield, is working much harder to convert each admit into an enrolled student, and a bigger scholarship offer is one of the most direct levers available for doing that. This is exactly the same underlying logic covered in our piece on why binding Early Decision has grown so popular -- schools use whatever tool is available to make yield more predictable, and for admits who haven't committed early, a bigger merit check is often that tool.
The part worth being honest about
NACAC's research also found a real equity gap inside this trend: at both public and private four-year institutions, higher-income students received larger merit-based grants than lower-income students, and white students were more likely than other groups to receive merit-based grants in both sectors. A merit scholarship isn't purely a measure of academic strength -- it's also shaped by exactly the enrollment-management incentives described above, which don't distribute evenly.
What this means for you
- A bigger merit offer from a school you're less excited about, and a smaller one (or none) from your actual first choice, doesn't necessarily mean the first-choice school valued you less -- it can simply mean the first-choice school has a high enough yield that it doesn't need to compete on price for admits like you.
- Schools further down your own list by prestige or selectivity are often exactly where the biggest merit offers show up, precisely because they're working harder to convert admits into enrolled students.
- Compare offers on net price, not the size of the "scholarship" headline number -- our piece on test scores and merit scholarships covers how those specific award tiers actually get set.