With the growing inflation rate, it is very difficult for students to pursue higher education without a strong financial backbone. And let’s face it, not everyone has rich parents to support their dreams. For those who don’t have trust funds, there is financial aid issued by the federal and state governments and other private organizations.
Financial aid basically covers all the expenses related to getting a good education. This includes tuition fees, room and boarding fees, costs of books and supplies, transit costs, etc. But not all types of financial aid cover every such need. In today’s article, we will be focusing on need-based financial aid. Here’s what we will discuss:
- What is Need-Based Financial Aid?
- What are the Different Types of Need-Based Financial Aid?
- Need-Based vs Merit-Based Financial Aid
- How to apply for Need-Based Financial Aid
- What is Non-Need-Based Financial Aid?
What is Need-based Financial Aid?
Need-based financial aid is granted by the federal government to students who can not afford their educational expenses. These consist of direct loans and pell grants. The process of qualifying for need-based financial aid is not easy. It is rather lengthy and tedious. You will read more about the process later in this article. The amount of the financial aid granted usually depends on total family income and a number of other factors. Usually, parents with a single child and income below $350,000 a year can get their kids to apply for it.
Also, there is something called non-need-based financial aid. It is beneficial for families who do not qualify for need-based financial aid, but have difficulty bearing the educational expenses of their kids. Any student can apply for non-need-based financial aid, irrespective of their financial status.
What are the Different Types of Need-Based Financial Aid?
Need-based financial aid can be in the form of grants, scholarships, subsidized loans or work-study programs.
Grants: These are instituted by either government bodies or private institutions. It is possible for colleges and universities to offer grant amounts. Each grant has its own norms that decide who is eligible to receive it and the procedure for awarding the same. It is usually awarded as a one-time payment and need not be repaid by the student to the institution.
Scholarships: The governments, universities, and other agencies offer scholarships with predetermined criteria that decides, if a student is eligible to receive the scholarship or not. In some cases, scholarships are offered on a first-come-first-served basis. A scholarship may be paid out as a check to the student or given directly to the college to cover the student’s tuition fees and other expenses.
Subsidized direct student loans: As a part of need-based financial aid, students can apply for heavily subsidized loans. These loans are usually offered without any collateral requirements. The interest rates on these are generally low and sufficient amount of time is given for repayment. Students are allowed to repay the loan in installments once they start working. This is one of the best ways of getting funds for education as you can repay it later, once you’re on your feet.
Work-study programs: A work-study program is a part-time job opportunity for undergraduate and graduate students to earn money for their educational expenses. Eligible students are offered both on-campus and off-campus jobs. Unlike loans, you neither have to pay back the money you earn from your job, nor will the paycheck affect your eligibility for Need-based financial aid.
Need-based Financial Aid Vs Merit-based Financial Aid
Need-based financial aid is given to students with not so good financial background. Based on their prospective income, this money is actually given to the students’ families. While granting need-based financial aid, factors like test scores, merit, IQ score are not evaluated at all.
Merit-based financial aid, also referred to as merit scholarship, is provided to students who are meritorious and have worked hard at their school/college to secure good marks. Apart from academic excellence, involvement in the field of co-curricular activities like dance, music, games, etc. is also considered. Since the need of the student is not considered here, a student with extensive assets or income is as entitled to a merit-based financial aid as a student with limited assets or income.
How to Apply for Need-Based Financial Aid
To apply for need-based financial aid you will have to fill up and submit the Free Application for Federal Student Aid (FAFSA). This form is used to find out if a family is eligible for need-based financial aid. Different financial aids such as pell grants and institutional scholarships are provided based on a first-come-first-served basis. It is always advisable to get the detailed information from the financial aid office of the specific school/college you’re planning to join.
How to calculate Need-Based Financial Aid
Need-based financial aid is generally calculated by the financial aid officer at your college or university. For this, you need to submit all the documents regarding your Expected Family Contribution (EFC), Cost of Attendance (COA) including all the expenses incurred by a student to attend class (tuition fees, cost of room and boarding, loan fees, transportation cost, etc.), and the enrollment status. Based on these documents, the need-based financial aid for which you are eligible is calculated by this formula:
Need-Based Financial Aid = COA – EFC
Having an understanding of the different kinds of financial aids available will help decide
which colleges you can apply for. It will also reduce the cost of education and the trauma of high interest study loans. Hope this article helps. All the very best for your career ahead!