Merit-based aid comes into play when colleges, especially those out of the top tier, get into bidding wars for desirable students.

FORBES: Paying for College: Merit Aid

The school's financial counselors have shifted to a case-by-case approach to financial aid and to increasing the amount of merit-based scholarships available, she says.

WSJ: Part-Time M.B.A. Programs Lend Students a Hand in Hard Times

But they're less accurate at predicting need-based grant aid from colleges and don't predict merit aid well, says Mr. Kantrowitz.

WSJ: The New College-Cost Calculators: Are They Accurate?

With a counselor's help, the school's financial-aid office pulled together enough assistance to keep him in the program, including a merit-based scholarship and assistance with federal loan applications.

WSJ: Part-Time M.B.A. Programs Lend Students a Hand in Hard Times