How generous are NMS awards?

By Rajkamal Rao  

The NMSQT Scholarships
The PSAT-11 test also serves as the National Merit Scholarship Qualifying Test (NMSQT) and assumes enormous significance, more important than the SAT/ACT.

Nearly 1.6 million 11th grade students took the PSAT in 2018. Only 16,000 high achievers, about 1% of the total, qualified for the NMS Semifinalist recognition. The NMS Semifinalist determination is based only on the Selection Index Score (SIS).

About 15,000 were classified as NMS Finalists using additional filters such as grades, extracurricular activities, essays, and principal nominations.

About 8,000 qualified for the NMS Scholar recognition, about 0.5% of the total.

Recap: How SIS Scores Are Calculated

The National Merit Scholarship Corporation piggy-backs on the exhaustive/expansive testing infrastructure of the College Board to use the same PSAT-11 scores to determine its awardees. The NMSC is a non-profit that lobbies thousands of private companies to dole out merit scholarships to merit-worthy students.

The SIS, which the NMSC generates, weights a student's "Reading and Writing" skills as 67% important whereas Math skills are rated as only 33% important. A future NMSC could change the SIS computation to make the two sections equally weighty, or even switch the weights given the world's gravitation to STEM fields. But for 23 years, the non-profit has stayed with its current bias towards reading and writing.

Suppose a student has a PSAT score of 1480, broken down into 730 on the "Reading and Writing" section and 750 on the Math test. The SIS is calculated as [730+730+750]/10 = 221. In Texas, the National Merit Scholar Semifinalist cutoff for the freshman college class of 2020 (students who took the PSAT-11 in 2018) was 221.

The bias in the SIS computation can mean that two students with identical PSAT scores could see different NMSC outcomes.

Suppose a different student had a 720 in Reading and a perfect 760 in Math. Her PSAT is 1480, just as the student above. But the SIS would be calculated as [720+720+760]/10 = 220. In Texas, this student would fail to qualify for the NMS.

The ranking of the Semifinalist winners is not performed nationwide but within each state. So, while a Texas student with a 221 SIS made the cutoff for the 2018 NMS awards, he would have failed to make it in California where the cutoff was 223. In Arkansas, the cutoff for the same year was 204.

The Semifinalist and Finalist Awards

At many universities, Finalists receive impressive cash benefits.

At Texas Tech University, National Merit Finalists who designate Texas Tech as their first choice institution with the National Merit Corporation will be eligible to receive 100% cost of attendance including tuition, fees, room, board, books, transportation, and a personal/miscellaneous allowance.

At UT Dallas, National Merit Finalists are automatically admitted into the Collegium V Honors Program, providing access to small class sizes and early registration. All tuition and fees are waived for four years, plus a stipend of $8,000 for each year is included. Also included is a $1,500 per-semester on-campus housing stipend and a one-time study-abroad stipend of $6,000.

Courtesy: UTD

At the University of North Texas, Finalists are admitted into the Honors College. All tuition and fees are waived. Housing, a meal plan, and personal expenses are also paid by UNT.

At Texas A&M, NMS winners get committed cash awards. If you're a Semifinalist but didn't make it to the Finalist stage, you will get $3,000 a year for four years. If you become a Finalist, you will get $7,000 a year on top. Plus, you will get another $500. This amounts to a total of $42,000 over four years. Given that Texas A&M's in-state tuition for 4 years is $47,480, this translates to an 88% discount in tuition, nearly a free ride.

At the University of Nebraska-Lincoln, tuition is fully waived for Finalists. At the University of South Carolina, Finalists qualify for in-state tuition plus get additional cash discounts. Even private universities like Baylor and SMU offer impressive cash awards. 

Why are these colleges so generous? Before we answer this vexing question at a time when tuition rates are rapidly rising, let's examine how selective they are - that is, how many students they admit each year out of every 100 students that apply.

  • Texas Tech = 70%
  • UNT = 70%
  • UTD = 69%
  • Texas A&M = 67%
  • Nebraska = 80%

To be sure, these institutions are not the most selective - and much like a professional sports team willing to invest resources in signing up star players, they are eager to land star scholars into their ranks by offering generous financial grants. To these colleges, the NMSQT scholars add prestige to their respective student bodies - so they aggressively recruit scholars with ever-so-sweet deals. Just because they send out letters does not mean that they have expended any funds. Most scholars rarely accept offers from such institutions preferring to attend colleges that have a "better brand."

But if the brand of the institution doesn't matter - the quality of the overall experience can still be very good at such schools - students who accept such offers benefit enormously. They graduate with practically no student debt and get an extremely powerful head-start to life. Even the power of a branded institution, where students have to incur a loan, may not often be a match. We have run studies that show that after allowing for slight differences in post-graduate income when attending a branded school, not having any student debt is an undeniably better financial situation for a student to be in than having a branded degree but with a large debt.

When colleges are more selective, they have fewer reasons to attract scholars through attractive cash scholarships. These colleges are so confident in their brand that they get their fair share of NMS scholars without having to make any dents in their budgets. They're increasingly diverting whatever NMS money they had to need-based scholarships for a larger cohort of students who can otherwise not afford to attend.

For these reasons, UT Austin has not been providing scholarships to National Merit Scholars since 2009. With a selectivity of about 38% and some programs (Engineering, Business) ranked in the Top-10, UT Austin doesn't have to "bribe" merit scholars its way. The pre-eminent institution in Texas boasted the second-largest cohort of NMS Finalists (behind Harvard) but since 2009, it is attracting fewer NMS Finalists as a result of its policy decisions. The best way for NMS students to get a full-ride scholarship at UT is to apply to the Texas Exes program for the Forty Acres award. This is extremely competitive - here are the profiles of the 2019 winners. About 15 students, out of about 50 NMS Finalists, will be selected for the award.

At elite private colleges, such as Stanford and Rice, Finalists don't get automatic rewards but are still considered the most likely to win the few merit awards that are given out. Remember that most awards at private colleges and universities are based on financial need, not merit.

The Scholar Awards

Every year, the top 7,500 among the Finalists - about one in two - get picked for one of three awards:

1.  The National Merit $2,500 Scholarships (about 2,500)
2.  The Corporate-sponsored Merit Scholarships (about 1,000)
3.  The College-sponsored Merit Scholarships (about 4,000)



True, the NMS awards dole out cash and benefits. But beyond the cash, the awards are about prestige where merit is still based on pure academic performance and not some, subjective "holistic" evaluation of a student's promise.

Whether the award is a letter from NMS or a $2,500 cash scholarship for someone who is privileged to reach tighter levels of the filter, the real value is the right to brag about this accomplishment during college admissions.

The selectivity of the top schools in the nation ranges from about 4.6% (for Stanford) to about 11% (for Cornell). When a student has earned a merit badge designating her as commended, she is in the top 3.125% of the student population. If she were to make the NMS Semifinalist cut off, she's in the top 1% of American students. All other things being equal, she should be sought by the top schools.

Of course, merit is not the only determinant in college admissions, as the Harvard case shows. How well-rounded you are - and what adversity factors you overcame, if any - matters just as much.

But any top college which rejects an NMS Semifinalist because they are not well-rounded enough does so at its own peril. For students, the key is to apply to several top schools carefully balancing selectivity and yield.

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