Find Funding for College 4: Need vs. Merit Financial Aid

This continues our series on finding funding for college—let someone else pay for it. You can learn more at the federal student aid web site.
You can divide student financial aid into two categories. First, financial aid awarded based on the need of the recipient. Second, financial aid awarded based on who the recipient is and what they did to deserve it. Few people—especially teens—recognize the difference between the two when they apply for financial assistance. Especially, when so sources of student financial aid exist.
Government Responds to Student Financial Crisis
Wikipedia makes an interesting observation

“With the yearly rising cost of tuition among schools across the nation, low-income students are finding it harder to pay for their education. In an attempt to help students meet the high, costly demands of college, schools have increased merit-based grants, for students with outstanding academic position, involvement in organizations, or high athletic talent. The issue is that these reasons for awarding scholarships take away from low-income students who often do not meet these merit standards. In other words, funds for merit-based scholarships are taking away from the already small amount of federal aid available to low-income students who simply cannot pay for college without some kind of financial aid. It was clear that with a continuous rise in college costs, action needed to be implemented in order to assist students in paying for the education they need to succeed.
In recent years, government has responded to the financial crisis students are facing and therefore passed legislation that boosted the value of grants for low-income students and trimmed subsidies for private education lenders. Schools have also taken action for the sake of students. ”

Needs versus Merit Based Rewards
Need-based financial aid includes:

• Pell Grants
• Federal Supplemental Educational Opportunity Grants
• Federal Work-Study Programs
• Stafford, PLUS and other loans
• State student incentive grants

  Merit-based finance aid includes:

• Scholarships
• Perkins loans
• Awards
• Tuition waivers

Understanding the difference between need and merit based financial assistance helps you focus on applying for the most appropriate aid.
Wednesday we explain why financial aid committees want to give you money