Hello ladies (and gents)! I need some advice on how to ask my boss for more money!

I'm a software engineer at a large company. I've been working here for almost seven years and I have my Master's Degree. I'm a hard worker and I always get good performance reviews each year.

Recently, I've been feeling like my pay doesn't match my value. I honestly don't know how much other engineers with my experience make, but I'm under the impression that I am being under paid and I believe I deserve to be making more. Another software engineer with similar experience to me recently left the company to work for another company for a 20% increase. I'm certainly not expecting anything like that here, but I do think I deserve more than the standard 3% merit increase.

So... how does one go about talking to their boss about being paid more? Has anyone done it and have any advice? Any suggestions for what I should say? I have my performance review on Monday and assuming I get a good review (like always), I think it's the perfect time to mention my pay. Any advice would be appreciated!