In determining the price of college it is important to consider the types of aid that may be offered to an eligible student.
Merit-based aid is focused on the student’s academic and/or extracurricular achievements. Scholarships are the most common type of merit-based aid. Scholarships can come from many different sources – the college or university, private businesses, trade associations, nonprofit organizations, and community foundations. Typically grades, standardized test scores and participation in extracurricular activities are considered and students may need to maintain a specific grade point average through their college career to continue to receive these funds. The average merit-based award in 2019-20 was $11,287 and about 22% of all US college students received merit-based aid during this time period, according to US New & World. Many smaller colleges offer merit-based aid to help with the cost of college. There are 24 college and universities that do not provide merit scholarships, these are elite institutions such as Cornell University, Dartmouth College, Harvard University, Massachusetts Institute of Technology, Princeton University, Stanford University, and Yale University to name a few. These schools do not need to offer merit scholarships because so many students want to attend these schools and are willing to pay full price.
Need-based aid is focused on the student and family’s financial need. This is the most common type of aid awarded to US college students. Institutional grants and scholarships, state and federal grants, federal work-study and federal loans are all types of need-based aid. The most common need-based aid program is the Pell Grant with 33.6% of undergraduate students receiving this in 2019-20 per the National Center for Education Statistics. The maximum Federal Pell Grant award for 2022-23 award year is $6,895. The actual amount received is based on the student’s financial need. This need is determined by the expected family contribution (information reported on FAFSA is used to determine this), the cost of attendance, the status of full time or part time student and the timeline of attendance (a full academic year or less).
College students can receive both need-based and merit-based aid to help fund college expenses. Need-based aid is the most common type of aid. Merit-based aid is more difficult to secure. Not all colleges and universities offer both types of aid. Smaller private schools tend to offer more merit-based aid and larger public institutions tend to focus more on need-based aid.