More than 80% of college students received financial aid in the form of scholarships, grants, or low-interest loans from 2020 to 2021. Scholarships are one of the most attractive types of aid because they don’t have to be repaid—unlike loans, which eventually do. Here is what you need to know about both need-based (i.e., intended for students with "exceptional financial need") and merit (i.e., awarded to students with excellent academic promise or talent) scholarships and how to be considered for them.

What Is a Scholarship?

A scholarship is money provided by the government, a college, or another organization to offset some of the costs of attending college. Technically, what many people think of as scholarships are actually grants. The federal government’s 澳洲幸运5官方开奖结果体彩网:Pell Grants are one such example.

"The terms ‘scholarship’ and ‘grant’ are often used interchangeably,” explains , president of Cerebly Inc. “But most scholarships are awarded based on merit—such as academic, artistic, or athletic talent—and most grants are awarded based on financial nee🅺d. Some scholarships may be awarded based on both merit a💖nd need.”

Need-Based Scholarships and Grants

Federal Aid

To be eligible for federal grants and other financial aid, parents and students must fill out the 澳洲幸运5官方开奖结果体彩网:Free Application f🔜or Federal Student Aid (FAFSA) from the United States Department of Education. The FAFS🍬A asks a series of questions about parents’ and students’ income, assets, and other relevant factors in order to determine how much need-based federal aid they might qualify for.

The information on the FAFSA is used to determine your 澳洲幸运5官方开奖结果体彩网:Student Aid Index (SAI). The SAI considers factors like family income, assets, and the household income and is used to calculate the need for financial assistance. The colleges themselves use that figure to calculate the amount and type of federal aid to offer a student. Families who receive federal aid must fill out the FAFSA each year the student is in college in order to remain eligible. When a family's financial circumstances change—say, someone loses a job—it can also be a good 🍬idea to fill out a new FAFSA, even if it didn’t result in any aid the first time a🗹round.

Families who aren’t ready to fill out the FAFSA can get a preview of their likely SAI by using the Department of Education’s Federal Student Aid Estimator. It asks a series of questions similar to the FAFSA and determines the types and amounts of federal aid a student might qualify for, in addition to an expected family contribution.

Possible Components of Federal Aid

Federal student aid can take the form of Pell Grants, work-study programs that provide students with paid part-time jobs, and low-interest 澳洲幸运5官方开奖结果体彩网:direct Stafford loans. Pell Grants are reserved for students with what the government calls “exceptional financial need.” The maximum Pell Grant for 2024–2025 is $7,395. A lesser-known program for students with exceptional need, the Federal Supplemental Educational Opportunity Grant (FSEOG), allows participating colleges to provide additional grants of $100 to $4,000 a year.

Colleges often offer students not just one form of federal aid but a package that might coꦯnsist, for example, of work-study and a lo🧸an. Those aid packages can differ from college to college.

Non-Federal Aid

Several hundred colleges and private scholarship programs also use the CSS Profile to determine eligibility for need-based non-federal financial aid. The CSS Profile is an online aid application administered by the College Board. Unlike the FAFSA, signing up for it isn’t free. Families pay $25 for the first school they apply to, then $16 for each subsequent school. Those fees are waived for some low-income families.

For families who expect to receive some federal aid, the Department of Education’s College Scorecard can be a useful comparison tool. The College Scorecard provides average annual net costs at each college for students who receive federal aid. It’s based on the school’s published 澳洲幸运5官方开奖结果体彩网:cost of attendance (COA) minus the average amount of federal grants and scholarships (but not 澳洲幸运5官方开奖结果体彩网:student loans).

Non-Need–Based Federal Aid

The federal government also offers non-need–based financial aid. Colleges calculatℱe a family’s eligibility for non–need–based aid by subtracti꧂ng any need-based aid for which the student qualifies from the school’s published cost of attendance.

Most non–need–based aid comes in the form of loans—direct unsubsidized loans for students or 澳洲幸运5官方开奖结果体彩网:PLUS loans for parents. There is also a separate program for students who plan to become teachers in high-need fields and low-income areas called the TEACH Grant.

Merit Scholarships

Colleges also offer merit aid to supplement federal aid. In some cases, colleges use merit aid to compete with other schools for students with unusual academic promise or exceptional talents. In others, however, merit aid is largely a marketing tool—a way to reduce their published tuition costs in order to compete with less-expen𓃲sive schools (or those offering less merit aid) for desirable, but not necessarily stellar, students. Schools that have little trouble meeting their enrollment ꦐquotas are less likely to offer merit aid for that purpose.

Each college has its own criteria for deciding how much merit aid to offer. Grades, test scores, the studenജt’s home state, and even their prospective major are among the many variables that can figure into the equation. Colleges may use information from the FAFSA, and some have separate scholarship applications for students to fill out.

In addition to colleges, merit aid ꦬis available in the form of scholarships sponsored by corporations, states, civic groups, philanthropic foundations, and others. These schol🔯arships also typically require separate applications.

Merit aid also gives students and parents some leverage in appealing to college financial aid offices for a better offer. A recent change in the ethics code of the National Association for College Admission Counseling may make that even easier. It allows schools to offer additional incentives to early decision applicants, in addition to applicants who have already accepted an offer from another school—a recruiting tactic that was previously considered off-limits.

The Bottom Line

Scholarships are typically awarded based on need, merit, or a combination of both and given by governments, college, or private and civic organizations. Grants are different and are based almost excl๊usively on financial need. Low-income families might also pay for college using loans specifially structured for low-income individuals.

Each college has its own criteria for deciding how much scholarship money to hand out. Grades, test scores, the student’s home state—even their prospective major—are among the many variables that can figure into the equation. For fede꧟ral grants, students must fill out the FAFSA form.