The cost of higher education in the US is rising at an exponential rate. Although financial assistance in the form of student loans is readily available, repayment tends to be a common worry among parents and students.
More than 80% of American students obtain financial assistance in the form of loans and aids.
Amidst all these options, scholarships are the most attractive avenue as these don’t need to be repaid.
There are no hidden costs or interest charges and most scholarships are enough to cover the educational expenses.
Keep reading to learn more about need-based and merit-based scholarships and what you need to be eligible for them.
What Is A Scholarship?
A scholarship is a financial assistance offered by educational organizations, NGOs, and/or government agencies to help offset the costs of college education. Usually, this financial assistance is provided to students based on their academic and departmental accomplishments. At times, it is also offered to students from low-income groups to help compensate for the expenses of attending universities and colleges.
Scholarships can either be in the form of cash or in the form of books and other academic and study-related materials. However, a lot of people get confused between the terms “grant” and “scholarship”. To be clear, most scholarships are offered based on the student’s merit or their need for financial assistance.
What Is The Difference Between A Scholarship And A Grant?
Both scholarships and grants are considered financial aid for higher studies and students don’t need to pay them back. Although these terms are often used interchangeably, there are a few major differences between them.
For instance, grants are offered by NGOs( Non-governmental organisations), educational organizations, and government bodies based on the student’s need for financial assistance. Thus, it is purely need-based. On the other hand, scholarships are mostly offered based on the student’s merit and talent. In some cases, scholarships are also offered to financially dependent students.
Need-Based Financial Aid
To be eligible need-based financial aid, students or their parents need to submit an application.
Here’s a detailed overview of the process:
To be eligible for a need-based scholarship, interested students as well as their parents need to fill out the FAFSA form. This form has a bunch of questions related to the overall income of the student and parents, assets, and other relevant factors that help determine the amount of need-based financial aid they can qualify for. This information is used to estimate the expected family contribution (EFC) according to the set guidelines by the federal government.
Components Of A Federal Aid
Sometimes this need-based financial aid is offered in the form of Pell Grants, work-study programs, and Direct Stafford loans. However, Pell Grants are explicitly reserved for students with proven financial needs. Another lesser-known aid called Federal Supplemental Educational Opportunity Grant (FSEOG) offers additional grants ranging between $100 to $4,000 per year to students with exceptional financial needs.
There are many other colleges that evaluate the need for financial aid by reviewing the CSS profile administered by the College Boards. Interested students and parents need to fill out an online application to check eligibility. Unlike FAFSA, the application isn’t free and you need to pay $25 for the first college you apply to, then $16 each for every additional application. These fees may be waived for families with proven low-income.
Non-Need-Based Financial Aid
Non-need based financial aid is calculated by deducting all need-based aid that the student qualifies from the cost of attendance published by the college. Listed below are the details:
- Federal Loans - If eligible, students can obtain direct subsidized loans and parents can access PLUS loans from the federal government. Both loans offer fixed interest rates, flexible terms, and multiple repayment options. To be eligible for these loans, students must be enrolled at least half-time in an institution that is a part of the Federal Direct Loan Program. The Department of Education (ED) also offers a specific program known as the TEACH Grant for those candidates who aspire to be teachers in low-income regions.
- Merit Scholarships - To support financial aid, many colleges also offer merit-based aid. Students with exceptional talent in academics or proven talent in other virtues like sports, arts, or music can apply for this. Each college has its own way of deciding how much merit aid can be provided. Many factors, including test scores, overall grades, the student’s home state, and more are considered before ascertaining the amount.
Unlike loans, scholarships don’t need to be repaid. Due to this reason, scholarships have become much more desirable among students and their families. However, the final approval depends on the government and the college you choose to go to. Check the available options, fill out the required forms, and check your eligibility before joining the institution.