Merit versus Need-Based Aid

 

The first distinction to make is the different types of financial aid you might receive from a college. Merit aid means that money may be awarded based on academic performance (high school GPA, SAT/ACT scores), community service, musical ability, or other specific qualifications. There are typically different levels that these scholarships have that range in monetary value. On the other hand, need-based aid is given out based on a family's demonstrated need, as shown by the EFC on the FAFSA. Some colleges say that they will "meet 100% of demonstrated need." This means that you would receive need-based financial aid to cover everything except for the amount your family is expected to pay. Need-based aid can take the form of grants, scholarships, loans, or even a few other forms of aid.

 

Scholarships and Grants

 

Scholarships and grants are oftentimes referred to as "gift aid" because this is money that does NOT have to be paid back. These grants and scholarships can come from either the college itself or from the State and the Federal government. You may be eligible to receive the PHEAA grant from the state or to receive the Pell grant from the federal government. It is important to note that these grants and scholarships are typically only given for four years and usually have minimum GPA that you must maintain while in college. This is based on the amount of time it should take you to complete a college degree. Check with your college to see if there is any extra application you may need to do to receive financial aid or if there are certain criteria (SAT scores) for certain scholarships.

 

Remember that private/outside scholarships are not included in the financial aid package that you receive from your college. Outside scholarships usually go towards covering your family's out of pocket costs so that there is less that you and your family will have to pay up-front.

 

Loans

 

As part of your need-based aid, you may see that you have been awarded some loans. These are typically federal loans and are either a Subsidized, Unsubsidized, or a Parent PLUS loan. See the Understanding Loans section to learn more about the differences between these loans. If you are receiving outside scholarships, you may choose to eliminate one or more of these loans so that it is less money you will have to repay. Talk with your family to find out what is the best course of action for you regarding loans.

 

Other forms of aid

 

On your financial aid award letter, you may also see "Federal Work Study." This means that you would find a job on your college's campus and have that as a source of income. While there is the option to have a certain percentage of this income earmarked for tuition, it may be better to view this source of income as your own spending money. These funds can be set aside to help cover your personal costs throughout the year such as food, travel, textbooks, and other personal necessities.