Need-Based Aid vs. Merit-Based Aid

Two students apply for federal student aid—a mediocre student and a high-achieving student. Which applicant will receive a higher award?

a) The mediocre student
b) The high-achieving student
c) The student who applied first
d) The better-looking student
e) Cannot determine from the information given

Are you holding an intense internal debate, vacillating between C and D? Well, you might be surprised to learn that the correct answer is actually E . Here’s why.

Need-based Financial Aid

Federal student aid is need-based. That means it doesn’t discriminate by any factor apart from financial need. Eligibility is based solely on the assets and income of the prospective student and his or her family. Factors such as test scores or athletic ability have no bearing on need-based aid.

Merit-based Financial Aid

On the other side of the coin is merit-based aid. Merit includes a variety of talents and interests: academic, artistic, athletic, and the list goes on. Scholarships are the most common type of merit-based aid (though some do have a need-based component), which may come from the school or from outside sources. Assuming need is not a condition. A student with extensive assets and income is just as entitled to a merit-based award as a student with limited assets and income.

Educate Yourself on all Your Financial Aid Options

For the far majority of students, the chief source of financial aid will be need–based aid. However, it’s important to educate yourself on the variety of assistance available. Regardless of your economic situation, take every opportunity to lessen the financial burden.

Source: The Princeton Review