What Types Of Financial Aid Are Awarded To Students?
Financial aid may be based on financial need or merit, or a combination of the two.
Need-Based Financial Aid
Most federal, state, and college financial aid is based on a student’s financial need. Recipients may receive financial aid to cover some or all of their college costs beyond what they can afford. In addition, need-based aid:
- Requires the student to file the FAFSA and possibly other financial aid applications
- Is determined by a standardized formula that colleges use to calculate how much each family can afford to contribute
- Requires the student to fill out an application each year
- May be awarded in the form of grants, work-study, and/or loans
Grants are gift aid, and generally do not have to be repaid. The Federal Work-Study Program provides the student with an award that can be obtained once the student gets a part-time job at or near the school which is on the approved list of work-study placements. The job can be on campus, off-campus, or community service. It is up to the student to find a job placement once they are on campus.
There are four types of Direct Loans:
- Direct Subsidized Loans (for undergraduate students)
- Direct Unsubsidized Loans (for undergraduate, graduate, and professional students)
- Direct PLUS Loans (for parents of dependent undergraduates; and for graduate or professional students)
- Direct Consolidation Loans (for student or parent borrowers to combine federal education loan debts)
Merit-Based Financial Aid
Merit-based financial aid is generally awarded by a college in recognition of a student’s achievement — academic, athletic, artistic, or extracurricular — in the form of a scholarship. Colleges award merit-based financial aid based on a set of factors they determine is important to them. It is a discretionary function and typically they select their most competitive applicants as recipients of merit aid. When awarding merit-based financial aid, each university:
- Establishes its own qualifications, sets the award amounts and provides its own application process. At some universities just submitting the admissions application is enough for students to be considered for scholarships. At some universities, it involves a separate application process and it may have requirements like essays and letters of recommendation. Students should visit each university’s website to see how they administer merit aid. Pay attention to the deadlines that universities set for students to be considered for merit scholarships.
- The university may determine that a merit scholarship is non-renewable and if it is renewable, the terms of the renewal will be defined in the award letter.
- The university typically compares the applications of students to determine who the recipients of the scholarships will be as well as the amount that is awarded to each student.
- Some universities require students to participate in an on-campus interview before they determine who will receive the awards.
For a full presentation about the financial aid process, please review this video.