Many college students in the U.S. receive adequate financial aid to bear their tuition, school supplies, housing rents, and other expenditures. A report by the college board concludes that undergraduate and graduate students in the U.S. received up to $235 billion monetary aid in the form of loans, tax credits, grants, work-study benefits, and scholarships in 2020-21. There are two types of financial aids students can avail themselves of in the U.S., Need-based aid and Merit-based aid. This article entails a comparison of need-based aid vs. merit-based aid and ways you can secure them.
Need-Based Aid
Need-based aid is perhaps the most common form of financial aid in the U.S. Typically, and federal organizations sponsor these funds in the form of state and federal grants, federal loans, and federal work-study
In 2020-21, Pell Grant became the most popular need-based aid program that helped around 6.2 million students from less endowed backgrounds receive financial aid. This year, the Pell grant award amounted to $6,495.
Students with elevated financial needs can also apply for the Federal Supplemental Educational Opportunity Grant. The grant extends up to $4,000 per year, sufficient for tuition fees and necessary college expenses. Other state-offered financial aids include tuition waivers and federal work-study programs.
Need-based financial aid is not limited to government-owned organizations. Some organizations and private businesses also provide need-based scholarship opportunities to deserving students.
If you feel eligible for need-based aid, fill out the FAFSA application form to apply. Unlike merit-based scholarships, you must apply for the grant each year to continue getting financial support for your studies.
Merit-Based Aid
The aid granted to students based on their academic and extracurricular achievements is merit-based. Scholarships are the most common form of merit-based assistance, which is why it is not dependent on the financial status or background of the students.
The federal government funds most of the scholarships to both national and international students; however, students may also receive such aid from private enterprises. Scholarship committees review students’ grades, GPAs, test scores, participation, and achievement in extracurricular activities before awarding them with a scholarship.
Colleges generally award scholarships on a yearly or semester basis. However, if students maintain a positive track record, they can extend throughout the degree. The U.S. News and World Report suggest that students were granted up to $11,287 merit-based aid on average in 2019-20.
It is important to note that not every college offers merit-based aid to its students. Sometimes, scholarships remain limited to smaller colleges to cut tuition expenses; other large-scale colleges like Ivy league schools don’t provide such forms of aid.
You can also find various community organizations and foundations that offer award-based financial aids to bright students from different fields. As a prospective student, you should browse online scholarship boards that offer merit-based aids in subject matters and regions in which you want to pursue your studies.
Need-based aid vs. merit-based aid
In case one type of aid is insufficient to fund your studies, school supplies, housing, you can also apply for both at once.
Do note that merit-based aids are difficult to secure compared to need-based ones. To be eligible for merit-based aid throughout their course, students must maintain a high decorum in academic and extracurricular activities.
Merit-based scholarships are tough to obtain because they are only available at selective institutes, mainly small private-owned colleges. Students going to large-scale colleges and institutions need to fund their studies through need-based financial aid.
Other Types of Financial Aid
In addition to need-based and merit-based aid, students receive financial assistance from other sources. Private loans, for instance, can be a suitable way for students to overcome their financial shortcomings related to education.
Usually, banks and credit unions provide these private loans. Therefore, students should only receive such aids if no other method is available. Loans required through banks may have high-interest rates that make it arduous for students to pay them back.
Other options include financial aid acquired based on interest or achievement in a particular subject. Hardworking and talented students in that specific field are more likely to get such funds. Moreover, students of color or belonging to certain ethnic or demographic groups can also acquire funds through respective resources.