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The Effects of GPA and Test Scores on Financial Aid Opportunities and Student Loan Applications


For the vast majority of students, applying for financial aid is an integral part of the college admissions process and as part of that process, many colleges will look at your scores to determine the type of financial aid to award you. As a college-bound student, it is important that you understand how your GPA and test scores will affect your financial aid opportunities and student loan applications.

You already know that maintaining sufficiently high grades and doing well on standardized tests like the SAT and the ACT are both crucial to getting into college. However, aside from affecting your chances of getting accepted into your dream schools, do good grades and high test scores influence your financial aid? Moreover, do they automatically equate to better financial aid opportunities? We’ll discuss these in detail below.

Do test scores and GPA affect your chances of getting financial aid?

Simple answer: it depends on the type of financial aid you’re applying for.

Financial aid comes in two forms—need-based and merit-based—and your grades and test scores have varying effects on each type.

Need-based vs. merit-based financial aid

As you may have already guessed, need-based scholarships are based on your family’s economic standing. Getting this type of aid involves filling out a Free Application for Federal Student Aid (FAFSA) form so that your Expected Family Contribution (EFC) may be assessed accurately. Need-based grants help bridge the gap between your EFC and the cost of attendance at the university you’re going to. The most generous schools like Harvard, Yale, and Stanford give grants that cover 100% of your computed financial need (some of them may ask you to also fill-out the CSS profile, a more detailed FAFSA). Meanwhile, other colleges offer scholarships that cover only a portion of your computed need. With that said, need-based financial aid only depends on your family’s ability, or inability, to pay for your college education. When your awards are determined, your GPA and test scores are not taken into consideration.

On the other hand, when competing for merit-based financial aid, your SAT/ACT results and high school grades are significant. Scholarships under this classification are used by colleges and universities to attract high-achieving students and commonly, are awarded, at least partially, on the basis of your academic performance, test scores, and/or other unique talents—i.e. athletics, music, or the arts. Having an excellent GPA and impressive scores on the SAT or ACT will play a big part in whether or not you’ll be awarded a merit-based aid.

Test scores or GPA: Which one is more important in getting financial aid?

Merit-based financial aid applications are processed differently from college to college. Some scholarship programs put an emphasis on excellent high school grades, while some are solely-focused on selecting applicants that have higher-than-usual test scores. As such, it’s important for you to carefully read the terms of the grant you’re applying for to get a better idea of how these two qualifications compare to each other in terms of degree of importance.

For example, Baylor University was all over the news back in 2008 after it had been discovered that they were offering to award $1,000 a year in merit scholarship aid to admitted students, provided that they retook the SAT and managed to raise their scores by at least 50 points. Higher test scores for admitted students equates to better admissions stats and higher rankings. While the Baylor example is an isolated example, the fact that it happened speaks to the importance, to colleges, of ranking higher. If you, and your scores, will help them rank better, then there may be money available for you.

Which type of financial aid should you apply for?

It’s not too difficult to assess whether or not you have a fair chance of snagging a merit-based scholarship. The general rule goes like this: the more eager a university is to have you in their incoming class, the higher the chances of you being awarded financial aid. This eagerness stems from you being an outlier (in a positive way) in the admitted batch. If your test scores and GPA are significantly higher than what they usually accept, they have more incentive to woo you with money.

With that said, the opposite also applies. If a college doesn’t see you as a prized applicant, they’re less likely to offer you an attractive scholarship. This is why ensuring that your qualifications are as high as possible is vital in securing merit-based aid.

This also explains why merit-based scholarships are rare in top schools like the Ivy Leagues, MIT, and Stanford. These colleges already have access to the best of the best. They have a massive pool of the highest-scoring students scrambling to get in, so offering money to attract them is unnecessary. There are some exceptions, however, as in the case of unique applicants who contribute to the diversity of the incoming batch. This diversity can be geographic or racial, or it can also involve high-scoring students that intend to pursue uncommon fields of study. Unless you possess these qualifications, merit-based grants from the top schools may be hard to come by. However, as previously mentioned, they usually offer to cover 100% of your financial need, so applying for need-based aid is a smart move when it comes to high-ranking (often the most generous) universities. If you’re not planning to go to Harvard or similar schools and you have good test scores and a high GPA, applying for merit-based financial aid is a shot definitely worth taking.

Lastly, it is important to note that merit-based and need-based grants are not mutually exclusive, which means you can apply to both types of financial aid to help increase your chances in receiving free college money.

Does your GPA affect student loan applications?

The effect of your GPA on student loan applications will also vary depending on whether you’re applying for a federal student loan or a private student loan. Generally, however, they’re far less affected by these academic qualifications than merit-based scholarships.

Federal vs. private loans

The federal government’s student loan program is offered through private lenders, but are guaranteed through the Federal Family Education Loan (FFEL) program. This means there’s no need for you to have a cosigner, and you’ll typically enjoy much lower interest rates compared to private loans. Federal loans take into account only your financial need to determine your eligibility, so you won’t have to worry about your credit history.

Federal student loans also do not reward applicants for having any sort of academic distinction—including having a high GPA. However, you have to have a GPA of at least 2.0 in order to qualify for any type of federal funding—but that’s pretty much it.

Private lending bodies are even less concerned with GPA. Typically, lenders will look only at your family’s credit score, monthly income, and debt-to-income ratio. They’ll only take GPA into account if your grades are exceptionally low.

What to do if you get a low SAT/ACT score?

Sometimes, you’ll get SAT/ACT scores that are lower than what you have been expecting. We get it—it happens even to the best of us. Fortunately, you have a choice to retake the SAT or ACT as you see fit. Before scheduling another test date, try to determine if a retake is necessary. You may check out our article about what makes a good SAT score for more information.

If you plan to retake the SAT/ACT to help increase your admission and/or financial aid chances, doing your absolute best is the only way to go. Immediately go over your answers and check what you did wrong, and then start your preparations ASAP. Your SAT and ACT scores will heavily influence your chances of getting merit-based financial aid, after all. It only makes sense to give it no less than 100%.

We strongly recommend that you seek the help of SAT and ACT experts to help you make the most out of the scheduled retake. Big Brains Education offers a personalized, focused, and effective approach to test prep, and we’re committed to helping you really maximize your scores.

What if you have a low GPA?

Try to finalize your application list as early as you possibly can to avoid having to order rush reports in the future. However, if it can’t be avoided and you find yourself not having a lot of wiggle room with regards to meeting the due date, then it’s better to err on the side of caution and avail of this service. After all, late submissions are never a good thing, and you must use everything in your power to avoid missing deadlines.

At this point, it’s clear that having a high GPA will not only improve your chances of getting admitted into your target schools—it also puts you in a prime position to receive merit-based money. But what if you’ve got a low GPA?

Unlike the SAT or ACT which you can retake plenty of times, high school grades are pretty much set in stone. But don’t fret! While the grades you’ve earned cannot be undone, there are several things you can do to remedy the situation.

Number one, commit to doing your best on the SAT or ACT. Some merit awards (like the previously mentioned Baylor award) are based on test scores exclusively. While your test scores won’t suddenly improve your GPA, they will qualify you for these awards.

You should also strive to improve your profile of extra-curricular activities. An applicant will surely earn bonus points for being actively engaged in the community they’re in.

Lastly, writing top-notch essays to show your target schools that there’s so much more to you as a person than what your GPA reflects is crucial. This is also a good chance for you to explain the circumstances behind your grades. Big Brains Education offers essay writing tutoring for college applicants, so you should definitely check that out.

Basically, it will come down to coming up with an effective strategy to boost your overall profile as an applicant despite your less-than-stellar GPA. Big Brains Education is an authority when it comes to college admissions strategy and positioning. So, if you’re looking for the best college applications advisers in Bellevue and Redmond, visit us and we are more than happy to walk you through the process on how we can help your college bound kids.