financial-aid-101There are two broad categories of financial aid – Merit Based aid and Need Based aid.


Merit Based aid is what you think of when you think “Scholarships.” These are usually awarded to students based on academic achievements, leadership, athletics, special talents such as art or music, volunteerism, or other personal qualities that set you apart. These scholarships do not consider financial need. A significant portion of all merit-based aid comes directly from the college/ university. Some schools may require additional scholarship applications, essays, interviews, and many colleges will have earlier deadlines to be considered for their scholarships. It is also important to remember that a lot of times the smaller, private colleges will have more money available for merit scholarships in order to help make attending their school competitive with the lower costs of the public colleges. It is important to keep an eye out for unique scholarships that might apply to your personal situation.


Need Based aid is what you will sometimes hear people refer to as “Financial Aid” even though both Merit Based and Need Based aid technically fall under that one category. There are a variety of different Need Based aid programs. Grants are considered gift assistance – they give you money and you do not have to pay it back. Loans which can come from a wide variety of sources – the federal government, the college, and private banks is money that you are required to pay back. Work Study programs are on campus job opportunities that the government helps find that allows you to earn money for college through working on campus. The big difference between Merit Based and Need Based aid is that with Need Based aid the type and amount of money you receive depends upon the amount of financial need you have.

The way financial need is determined is taking the “Cost of Attendance” (which includes tuition, fees, room, board, books, and other miscellaneous expenses) and then subtracting from that the “Expected Family Contribution” and the remaining difference is what is known as your “Financial Need.”  It depends upon each school as to whether they guarantee to meet your entire financial need with a financial aid offer. You can usually find this information on the college financial aid website.

If you are a freshman, sophomore, junior, or the parent of a student in one of these grades, you may be interested in using Net Price Calculators on each college's website to give you an idea of what you might qualify for regarding federal aid when considering colleges for the future.

And, yes, just to add to the confusion – there are some scholarships that will consider financial need as a criterion. They are still awarding the scholarship based upon some specific aspect of who you are it is just allowing them to narrow down the potential applicant pool.

If you have any questions you can always call the financial aid offices of the schools where you are applying as they are true experts in the field.