Learn the difference betweenFINANCIAL AID, GRANTS & SCHOLARSHIPS

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Need-Based vs. Merit-Based Aid

Need-Based Financial Aid

Need-based aid is financial aid offered to student based on financial need.
A student’s financial need is usually determined by their FAFSA or CSS Profile.
The FAFSA determines a student’s EFC, or Estimated Financial Contribution, which estimates how much of the family’s income can be contributed towards paying for college.
Therefore, a student’s “financial need” is determined by subtracting the student’s EFC from the school’s Cost of Attendance (COA).
- For example, if a school’s cost of attendance is $40,000 and your EFC is $15,000, then your financial need is $25,000.

Types of Need-Based Aid:

Federal Pell Grant: Pell grants are considered gift aid from the federal government, meaning they do not have to be repaid. The size of the Pell Grant you are offered is based on your financial need, and also the maximum amount given for that year. Federal
Supplemental Educational Opportunity Grant (FSEOG): This is another type of gift aid offered to students at participating colleges and universities who demonstrate significant financial need. Each school determines how FSEOG grants are awarded to qualifying students.
Direct Subsidized Loan: These loans are available to students based on the amount demonstrated by their financial need. While the money provided must be repaid, the U.S. government subsidizes, or supports, your repayment by waiving your interest while you’re in school and for six months following graduation.
Perkins Loan: These loans are also made available based on the student’s need, however funds are provided directly from the school rather than the U.S. government. Interest rates are low at 5%, but must be repaid in full.
Federal Work Study: Students who demonstrate need may also be offered work-study opportunities to work part-time on campus and earn money for books, tuition, and other living costs.

Merit-Based Financial Aid

Not all financial aid is given based on a student’s financial need. Some aid is awarded based non-need-based factors, such as academic achievements, skills, or talents.
These awards are usually offered by state governments, specific schools, or private organizations, rather than the federal government.

Types of Merit-Based Aid:

Scholarships
Awards
Tuition
Waivers

GRANTS & SCHOLARSHIPS

What are they?

Grants and scholarships are commonly referred to as “free money” because this money does not have to be repaid, making them the most desirable form of financial aid. Grants are typically based on financial need, whereas scholarships are typically merit-based. Grants and scholarships are available from the federal and state government, private and nonprofit organizations, and colleges themselves.

How to Get Federal Grants

Fill out the Free Application for Federal Student Aid (FAFSA).
This will calculate your Expected Family Contribution (EFC).
The school you attend will subtract your EFC from the total cost of attendance, creating your Demonstrated Financial Need.
Depending on your college’s policy, it will meet up to 100% of your Demonstrated Financial Need in a financial award package.
This package may include any combination federal loans, grants, and work-study.
The school will give you instructions on how to accept your financial award package.

Federal Pell Grant

Available for students with exceptional financial need

Federal Supplemental Educational Opportunity Grant (FSEOG)

Available for students with exceptional financial need
Federal Pell Grant recipients receive priority
Funds awarded depend on school participation and availability; not all schools participate

Teacher Education Assistance for College and Higher Education (TEACH) Grant

Available to students taking coursework to become primary or secondary educators
Must serve as educator in high need area for four of first eight post graduation years
Must meet academic achievement standards

Iraq and Afghanistan Service Grant

For students whose parent or guardian died in service in Afghanistan or Iraq after events of 9/11
Must be ineligible for Federal Pell Grant due to not having requisite level of financial need
Must have been under 24 or already enrolled at a school at time of parent or guardian’s death

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There are non-governmental grants and scholarships available. Colleges will often provide a great deal of financial aid in the form of grants and scholarships. To tap into college-specific grants, be sure to submit all the financial forms they require, which may include FAFSA, CSS Profile, parent W2 and tax returns, or an institution-specific form. Contact your university to find out if they have any specific merit-based scholarships you can apply to. Sometimes these applications are during the college application process, and sometimes that are later in your college careers as you develop your particular interests.

You can also supplement your financial aid package with scholarships from private organizations. Research your parents’ employers, local organizations, and national groups like the National Association for the Advancement of Colored People (NAACP) or Boy Scouts of America for private scholarship opportunities. There are a tremendous amount of online resources that will help you search for private scholarships that match your interests, qualifications, and demographic information. However, never pay for scholarship information. Information on scholarships should always be free, and if a service requires your credit card or other payment information before telling you about available scholarships, it is likely a scam.

GRANTS & SCHOLARSHIPS

What are they?

Grants and scholarships are commonly referred to as “free money” because this money does not have to be repaid, making them the most desirable form of financial aid. Grants are typically based on financial need, whereas scholarships are typically merit-based. Grants and scholarships are available from the federal and state government, private and nonprofit organizations, and colleges themselves.

How to Get Federal Grants

Fill out the Free Application for Federal Student Aid (FAFSA).
This will calculate your Expected Family Contribution (EFC).
The school you attend will subtract your EFC from the total cost of attendance, creating your Demonstrated Financial Need.
Depending on your college’s policy, it will meet up to 100% of your Demonstrated Financial Need in a financial award package.
This package may include any combination federal loans, grants, and work-study.
The school will give you instructions on how to accept your financial award package.

Federal Pell Grant

Available for students with exceptional financial need

Federal Supplemental Educational Opportunity Grant (FSEOG)

Available for students with exceptional financial need
Federal Pell Grant recipients receive priority
Funds awarded depend on school participation and availability; not all schools participate

Teacher Education Assistance for College and Higher Education (TEACH) Grant

Available to students taking coursework to become primary or secondary educators
Must serve as educator in high need area for four of first eight post graduation years
Must meet academic achievement standards

Iraq and Afghanistan Service Grant

For students whose parent or guardian died in service in Afghanistan or Iraq after events of 9/11
Must be ineligible for Federal Pell Grant due to not having requisite level of financial need
Must have been under 24 or already enrolled at a school at time of parent or guardian’s death

There are non-governmental grants and scholarships available. Colleges will often provide a great deal of financial aid in the form of grants and scholarships. To tap into college-specific grants, be sure to submit all the financial forms they require, which may include FAFSA, CSS Profile, parent W2 and tax returns, or an institution-specific form. Contact your university to find out if they have any specific merit-based scholarships you can apply to. Sometimes these applications are during the college application process, and sometimes that are later in your college careers as you develop your particular interests.

You can also supplement your financial aid package with scholarships from private organizations. Research your parents’ employers, local organizations, and national groups like the National Association for the Advancement of Colored People (NAACP) or Boy Scouts of America for private scholarship opportunities. There are a tremendous amount of online resources that will help you search for private scholarships that match your interests, qualifications, and demographic information. However, never pay for scholarship information. Information on scholarships should always be free, and if a service requires your credit card or other payment information before telling you about available scholarships, it is likely a scam.