(MONEY Magazine) – Colleges call them non-need-based awards, merit money or just plain scholarships. Whatever the name, they can sharply reduce a bright and ambitious student's college costs, or even eliminate them entirely. Merit scholarships are awarded for academic achievement or other factors not related to a family's finances. (Funds given on the basis of financial need are usually called grants.) The amounts range from a token $500 to four full years of tuition, fees, room and board, which can be worth more than $80,000 at an expensive school like Emory University in Atlanta. The chief sources: -- Uncle Sam, who gave $130.5 million in scholarships to outstanding members of the Reserve Officer Training Corps in 1991-92. Among last year's 4,000-plus winners: Erik Keeslar, 18, of San Mateo, Calif., pictured at left. His Navy ROTC scholarship covers four years' tuition, books and fees at the University of Washington in Seattle (No. 3 on MONEY's list of best college buys), plus a $100 monthly stipend during the school year; total value: $33,564. -- The states, which awarded $73 million to about 73,000 students in 1991-92 based on academic merit alone, up 87% since the 1986-87 academic year, according to the National Association of State Scholarship and Grant Programs. -- The colleges themselves. Roughly 86% of them offer scholarships, up from about 54% in 1974, according to one college research firm's estimate. This year, private schools will award an estimated $720 million in merit money. -- A growing number of corporations and private groups, including the National Merit Scholarship Corporation, which handed out $38.3 million last year; the Coca-Cola Scholars Foundation, $1.4 million; and the Tylenol Scholarship Fund, $600,000. % Despite these gains for brains, merit scholarships still represent a small sum when compared with the grants, loans and work/study jobs available to students who receive financial aid. Private colleges, for example, distribute about three times as much in need-based grants as they do in merit money, while state merit scholarships account for a mere 3% of total state aid for colleges. As a result, aid counselors recommend that you concentrate first on getting need-based aid, if you can qualify (as about half of all undergraduates do). ''Once you've done that, you can fit a scholarship search into your college financing strategy,'' says Anna Leider, author of Don't Miss Out: The Ambitious Student's Guide to Financial Aid (Octameron, $6). If you qualify for financial aid, winning a scholarship from a source other than the college you plan to attend may not actually improve your financial position. Reason: Many schools simply use an outside award to replace the grants they had planned to give you, leaving you no better off. Others, however, will use your outside scholarship to reduce or eliminate the loans and work/study opportunities that are part of most financial aid packages; that's a net plus for you, because you won't have to pay the money back or spend time working rather than studying. In any case, experts say it's smart to try for scholarships. ''Because family financial situations change from year to year, if you qualify for aid one year you might not the next,'' says Anne Sturtevant, financial aid director at Emory University. ''But a renewable merit award will still be there.'' Here's how to compete for major scholarships, listed from the most widely available to the most specialized: -- College scholarships. Public and private colleges alike are increasingly willing to use merit awards to attract top high schoolers. School-sponsored merit scholarships typically go to a handful of entering freshmen with outstanding high school grades and Scholastic Aptitude Test scores. For example, the Catholic University of America in Washington, D.C. annually promises full-tuition scholarships (current tuition: $12,556 a year) to 31 high schoolers who have applied for admission; those students usually have A averages and SAT scores of 1,200 or better. Similarly, Tulane University offers 125 scholarships for four years of tuition (now $16,925 a year) to prospective freshmen with A averages, SAT scores of 1,250 or above and demonstrated leadership qualities. Tulane has also pioneered a scholarship | aimed at students from middle-income families: It hands out $6,000-a-year merit-based awards for high-achieving students whose expected family contribution under financial aid formulas (see ''The New Rules of Financial Aid'' on page 42) is between $18,000 and a hypothetical $39,000 a year. The University of California's prestigious Regents Scholarship, offered to 488 exceptional high school seniors annually, is a hybrid: Winners who qualify for financial aid get a scholarship equal to the amount of aid they would have received; others get an annual $500 honorarium. To learn about merit scholarships at the schools you're considering, you can go to a library or guidance office to consult such references as Peterson's 1992 College Money Handbook (Peterson's Guides, $19.95), the A's and B's of Academic Scholarships (Octameron, $6) and College Financial Aid, Fourth Edition (Arco, $20). Then ask the schools' scholarship offices how to apply. -- Federal scholarships. Army, Navy and Air Force ROTC scholarships are among Uncle Sam's most lucrative -- and sought-after -- awards. Today, 16,389 of the 58,464 men and women in ROTC are attending school on scholarships that cover 80% to 100% of their tuition, books and fees for up to four years, plus a stipend. (ROTC awards do not include room and board.) The trade-off: Scholarship recipients, like all ROTC members, must serve at least eight years of active and reserve duty after graduation. Winning an ROTC scholarship can also make you more attractive to colleges. For example, shortly after Erik Keeslar parlayed a 3.98 grade point average, a 1,250 on the SAT and credentials as an Eagle Scout into a three-year ROTC scholarship, he heard from 11 universities to which he hadn't even applied; seven offered to supplement his ROTC award by, say, picking up his room-and- board tab. ''Colleges welcome ROTC scholarship students because they have demonstrated their qualities by receiving the award,'' says Jan Judziewicz, assistant director of financial aid at Marquette University in Milwaukee. The Navy ended up topping its own offer. To encourage Keeslar to attend the University of Washington, where the Navy funds research programs, it offered to cover a fourth year of tuition, fees and books. Keeslar accepted the deal. ''My parents could have paid my way if I went to a state school in California,'' he says. ''But since I wanted to study out of state, to see a little more of the country, money became an issue that the scholarship resolved.'' To ask about applying for an ROTC scholarship, call the local recruiting office of the service branch that interests you or talk to your high school guidance counselor. -- State scholarships. Twenty-three states award scholarships to brainy residents willing to attend home-state public or private colleges. For example, Georgia high schoolers with certain outstanding academic credentials, such as a 3.75 grade point average and a score of 1,300 or better on the SAT, are eligible for Governor's Scholarships -- up to $1,540 a year. Similarly, Wisconsin annually confers Academic Excellence Scholarships worth nearly $2,200 a year to about 600 outstanding high school students. In addition, 20 states offer special merit scholarships to the children of veterans or deceased police officers or to students who agree to work in-state after graduation, often as teachers. Ask your high school guidance counselor about such programs or call your state's higher education agency. -- Corporate and private scholarships. The nonprofit National Merit Scholarship Corporation runs the biggest private college award competition. To qualify, you must take the PSAT/NMSQT exam -- a preliminary version of the Scholastic Aptitude Test -- early in your junior year of high school. Of last year's 1 million test takers, 8,572 won money from the National Merit Scholarship Corporation or one of the 205 colleges and 390 private companies that support it. In addition, 769 students who took the PSAT/NMSQT won National Achievement Scholarships for Outstanding Negro Students. In general, the awards in these programs are one-time payments of $2,000 or annual payments of $250 to $2,000 for four years, depending on the sponsor. Moreover, some sponsors may increase the awards for winners with financial need. For more information about National Merit Scholarships, ask your guidance counselor for the Student Bulletin, which can also be ordered free from the National Merit Scholarship Corporation (1560 Sherman Ave., No. 200, Evanston, Ill. 60201). Here are some other private awards worth pursuing: -- The Coca-Cola Scholars Foundation pledges $1.4 million to 150 outstanding college-bound seniors who are judged primarily on leadership qualities, along with academic accomplishment. Fifty winners receive $5,000 annually for four years; another 100 get $1,000 annually for four years. About 92,000 students competed in 1991. To enter this year's contest, request an application, due Oct. 31, from your high school guidance counselor. -- The Tylenol Scholarship Fund, sponsored by McNeil Consumer Products (part of Johnson & Johnson), pays $10,000 to each of 10 high school seniors who demonstrate leadership skills and community involvement, along with having solid academic records. Five hundred runners-up receive $1,000 each. Last year, 44,000 students entered the contest. Applications, due Dec. 15, are available at stores where Tylenol is sold, or by writing to Tylenol Scholarship Fund, 1675 Broadway, 33rd Floor, New York, N.Y. 10019. -- The Westinghouse Science Talent Search awarded $205,000 to 40 science whizzes who submitted independent projects in science, mathematics or engineering last year. The top 10 prizes range from $10,000 to $40,000; 30 students receive $1,000 each; all 300 semifinalists get college recommendations as gifted science students. Last year's first-prize winner, Kurt Steven Thorn of Shoreham, N.Y., bested 1,700 other entrants with his study of the ''Elemental Distributions in Marine Bivalves as Measured by Synchrotron X-Ray Fluorescence.'' For an application, due Dec. 1, write to Science Service, 1719 N St. N.W., Washington, D.C. 20036, or call 202-785-2255. Many other large corporations also award merit scholarships to employees' children; parents can get rules and applications from their benefits departments. Geico, the insurance company, gives 30 scholarships to employees' children through three different programs; one award, for example, worth $1,000 annually for two years, goes to two students who plan to major in arts- related fields. For information on other scholarships, consult The College Blue Book: Scholarships, Fellowships, Grants and Loans (Macmillan, $48). Don't waste money on expensive computerized scholarship search services; most sell information that is already available from guidebooks (see ''How to Avoid the College Money Trap'' on page 10).

Finally, don't overlook money available from local churches, service clubs and civic groups. You can learn about such scholarships from your high school guidance office. While some groups provide as little as $100, remember: Every little bit helps.

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Coca-Cola and Tylenol consider leadership and community service, along with academic achievement, when deciding who wins their awards.