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Highly recommended but no merit-based aid

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Has this ever happened to anyone? A friend of mine auditioned at a top school and was told by one of the faculties that he auditioned very well, etc. Well, the letter arrived and instead of offering a generous aid or just something, it said that while he is "very highly recommended" by the faculty, they are not able to make an offer at this time. What about those students who were not so highly recommend? What were they offered, a negative amount?! Could this be a message that the school don't want my friend (very highly recommend) to attend this school?

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