What’s the Difference Between Need-Based and Merit-Based Aid?

We're comparing apples and oranges, just like we're comparing and differentiating need-based and merit-based aid

Flickr user matthewreid

These are two phrases you probably hear a lot while you’re researching scholarship and financial aid opportunities: need-based and merit-based. But what is the difference between the two? Is one better than the other? Let’s break it down.

Need-Based Aid

The word “need” is key here. Need-based aid refers to the financial need a student has in regards to paying for college. Need-based aid programs focus entirely on that aspect. College is expensive, and so need-based aid is abundant.

One great way to seek out this form of aid is to complete the FAFSA, or the Free Application for Federal Student Aid. It’s a form that’s used by the federal government to evaluate need and what sort of aid each student can potentially receive. Most students who file the FAFSA get some sort of aid, and even if they don’t many other sources of aid use the FAFSA form as well—like some private scholarship providers.

Need-based aid is not affected by things like academic achievement, leadership experience, GPA, test scores, or the like. That’s merit-need territory.

Merit-Based Aid

Unlike need-based, merit aid focuses on things other than the financial situation of a student (though that can still be a factor). Instead, merit aid takes into account a students GPA, their ACT/SAT test scores, their honors or accolades, extracurricular activities, and even things like religious affiliation, major interest, ethnicity, and other attributes.

Merit-based aid is often dependent on whoever the sponsor is. Perhaps they studied a certain subject in school and want to foster than in college-bound students. Maybe a group or organization wants to host an essay contest, and the winner gets a scholarship. Merit aid is as diverse as the people applying for it.

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Allison Wignall

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