The cost of your college education can be intimidating. Which is why it’s important to understand your options for financial aid! This includes need-based financial aid.
But what does “need-based” refer to? And how do you know if you qualify? Two good questions! And we’ll be answering them in this post!
We’ll also look at the difference between need-based vs. merit-based financial aid (and how you can easily find more opportunities to win both types). But, before we do that, let’s quickly go over…
What Type of Financial Aid Is Need-Based?
Need-based financial aid can help you pay for college expenses like tuition, housing, and books. It includes:
- Federal, State, and University Grants (including Pell grants)
- Work Study
- Subsidized Stafford Loans
- Need-Based Scholarships
What are federal, state, and university grants?
Federal, state, and university grants are sources of financial aid that do not need to be paid back.
Pell Grants are the largest federal student aid grant program and can provide up to $6,495 (for the 2021–22 academic year). Pell grants are specifically for undergraduate students whose income status demonstrates they’ll need extra support paying for college.
What is work study?
Work study is need-based financial aid that allows undergraduate students to earn money to pay for college through a job. With a work study job, you can work up to 20 hours a week during the school year and full-time during college breaks, including the summer semester. All of your wages are paid for by the Department of Education.
What are subsidized Stafford loans?
Subsidized Stafford loans are one of your options for federal student loans. The federal government pays the interest for these student loans while you’re in school at least half time, in deferment, or forbearance.
What are need-based scholarships?
Need-based scholarships are scholarships that are specifically for students that come from low-income backgrounds. For example, the Gates Scholarship is a need-based scholarship for high school students.
How to Know If You Qualify for Need-Based Financial Aid
To find out if you qualify for federal need-based financial aid (e.g. federal grants, work study, Stafford loans), you need to complete the Free Application for Federal Student Aid (FAFSA).
If you’ve never done that, be sure to check out our step-by-step guide on how to apply for FAFSA.
When you complete your FAFSA application, you’ll receive a document called a Student Aid Report. On that report, you’ll see your Expected Family Contribution (EFC).
The EFC will be used to determine your eligibility for need-based aid. If your expected family contribution is low, there’s a good chance you’ll qualify for one or more types of need-based financial aid.
Also, be sure to apply as soon as possible! The best need-based financial aid packages (i.e. the packages with minimal student loans) typically go to the students who submit the FAFSA early.
What Are the Income Requirements for Need-Based Financial Aid?
As we mentioned above, you can also receive need-based financial aid from the college you attend. Usually, this aid will be given to you in the form of grants and scholarships.
The requirements to qualify for need-based financial aid vary. Most colleges require your family to have an adjusted gross income of less than $50,000.
However, some colleges offer need-based financial aid for families with incomes up to about $100,000. Check with the financial aid department for each college on your list to find out if you qualify.
Need-Based Aid vs. Merit-Based Aid. What’s the Difference?
Merit-based aid and need-based financial aid are often confused. But, as you probably know now after reading through this post, they’re quite different.
Need-based financial aid refers to grants, work-study, federal loans, and scholarships designated for students from low-income backgrounds.
Merit-based aid, on the other hand, refers to any scholarship that doesn’t depend on your income status. Anyone can qualify for merit-based aid.
Where can you apply for merit-based aid?
Most colleges have merit scholarships. And when you apply for college, you’ll typically be considered for the college’s merit scholarships. But that doesn’t mean you’ll get one— even if you have an amazing high school transcript and top test scores. These college scholarships are usually limited and quite competitive.
You can find additional merit-based aid opportunities by looking for private scholarships. For example, the National Merit Scholarship is a type of merit-based financial aid.
Key Takeaways
Need-based financial aid is any form of financial aid that is awarded to students who need financial support to attend college. The types of financial aid that are need-based include:
- Federal, state, and university grants (including the Pell Grant)
- Work study jobs
- Subsidized Stafford loans
- Need-based scholarships
Your eligibility for need-based financial aid is determined after you apply for FAFSA. Be sure to do that early to get the best financial aid package! You can also receive merit-based financial aid from your college’s financial aid department and private scholarships.
To find need-based and merit-based scholarships, check out Scholly Search. It’s our college scholarship app that will help you find all of the scholarships you qualify for based on your interests, accomplishments, and traits!
And for more tips on how to pay for college, check out the rest of our blog where we go in-depth on topics like how to apply for scholarships, choose the best student loan, and graduate debt free!