A scholarship or grant can help you save money on college expenses.
Today, more than 80% of college students receive financial aid in form of grants, scholarships, and low-interest loans. Because they are not repaid, scholarships are one of the most appealing types of aid. This article will explain how you can be considered for merit and need-based scholarships.
What is a Scholarship?
A scholarship is money that the government, college or other organization provides to help offset the cost of college. What many people mistakenly consider scholarships are grants. One example is the federal government’s Pell Grants.
“The terms ‘scholarship’ and ‘grant’ are often used interchangeably,” explains Mark Kantrowitz, publisher and vice president of research at Savingforcollege.com. “But, most scholarships are awarded on merit, such as academic, artistic or athletic talent. Most grants are awarded on the basis of financial need. You may also be eligible for scholarships based on need and merit.
Need-based Scholarships and Grants
Federal Aid
Parents and students must complete the U.S. Department of Education’s Free Application for Federal Student Aid (FAFSA). To be eligible for federal grants or other financial aid, they must fill out the FAFSA. To determine the amount of need-based federal aid students may be eligible for, the FAFSA requires parents and students to answer a number of questions.
According to federal guidelines, the FAFSA information is used to calculate an expected family contribution (EFC). This is the amount a family could reasonably expect to contribute towards college costs. This figure is used by colleges to determine the type and amount of federal aid they will offer students. To remain eligible, families who receive federal aid must complete the FAFSA every year that the student is enrolled in college. Kantrowitz states that if a family’s financial situation changes, such as if someone loses their job or if there are two children attending college simultaneously, it can be a good idea for them to complete a new FAFSA.
If a family isn’t quite ready to complete the FAFSA, they can use the FAFSA4caster from the Department of Education to get an estimate of their expected EFC. It asks similar questions to the FAFSA to determine the type and amount of federal aid that a student may be eligible for.
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Federal Aid: Possible Components
Federal student aid comes in the form of Pell Grants and work-study programs which provide students with part-time, paid jobs as well as low-interest Direct Stafford loans. Pell Grants can only be granted to students who have “exceptional financial needs.” For 2020-2021, the maximum Pell Grant is $6,345, and for 2021-2022 it’s $6,495 Federal Supplemental Educational Opportunity Grant (FSEOG) is a lesser-known program that provides additional grants to students with exceptional needs. Colleges can offer up to $100 to $4,000 per year.
Many colleges offer more than one type of federal aid. They may also offer a package, which might include work-study or a national small loan. These aid packages may vary from one college to the next.
Non-federal Aid
The CSS Profile is used by more than 100 colleges and private scholarship programs to determine eligibility for non-federal need-based financial aid. The College Board administers the CSS Profile online. It is not free, unlike the FAFSA. The initial school the family applies to is $25, and each subsequent school is $16. Some low-income families may be exempt from these fees.
The Department of Education’s College Scorecard is a helpful comparison tool for families that expect to receive federal aid. The College Scorecard gives an average of the annual net costs for federally-funded students at each college. It is calculated using the school’s published cost to attend (COA) and the average amount in federal grants and scholarships. However, it does not include student loans.
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Federal Aid that is not based on need
Federal government offers financial aid that is not dependent on need. The college subtracts any need-based aid the student is eligible from the school’s published costs of attendance to calculate a family’s eligibility.
The majority of non-need-based assistance comes in the form loans, direct unsubsidized loans for students and PLUS second chance car loan for parents. The TEACH Grant is a program that supports students who want to teach in high-need areas and low-income communities.
Merit Scholarships
To supplement federal aid, colleges also offer merit aid. Some colleges offer merit aid to help students with exceptional academic potential or talents compete with other schools. However, merit aid can be used in some cases to lower tuition costs and compete with schools that offer less merit aid. Kantrowitz points out that merit aid is less likely to be offered by schools that are able to meet their enrollment quotas.
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Each college sets its own criteria to determine how much merit aid they will offer. The many factors that could be considered when deciding how much merit aid to offer include test scores, grades, and even the student’s home country. Some colleges may use the FAFSA information, while others have separate scholarship applications that students can fill out.
Merit aid can also be available through scholarships sponsored by states, corporations, civic groups, foundations, philanthropic foundations and other organizations. These scholarships usually require separate applications.
Parents and students can also appeal to college financial aid offices for better offers by using merit aid. This may be made easier by a recent revision to the National Association for College Admission Counseling’s ethics code. This allows schools to offer additional incentives for early decision applicants and applicants who have accepted offers from other schools–a recruitment tactic that was previously prohibited.
What’s the difference between merit-based and need-based scholarships?
Financial need is the basis for need-based scholarships. They are available for every year of college enrollment. Scholarships based on merit, however, are awarded to students who demonstrate academic or athletic excellence, as well as other talents and criteria.