The number one question we hear from parents during application season is, “How do we pay for college?” Between scholarships, grants, and financial aid offers, the language can get confusing fast, especially when people start talking about “need-based” versus “merit-based” aid. These two types of aid work very differently, and understanding both can help you find more money and reduce what your family actually has to pay.
What Is Need-Based Aid?
Need-based aid is financial help based on what your family can realistically afford, not on your student’s GPA or test scores. The goal is to make college more affordable for families who need support.
Colleges and the federal government figure this out using the FAFSA, and in some cases, an additional form called the CSS Profile. The CSS Profile is an online financial aid application from the College Board that gives colleges a more detailed picture of your family’s finances so they can decide if your student qualifies for the school’s own need-based aid, like grants and scholarships. It asks for more in-depth information than the FAFSA and is often required (especially by private colleges and some public programs). Using these forms, schools review things like your income, savings, and family size to estimate how much they believe you can pay.
That estimate is called your Expected Family Contribution (EFC), which is transitioning to a new term, the Student Aid Index (SAI). Don’t worry about the jargon — what matters is this:
If your family shows higher financial need, your student may qualify for:
- Federal grants such as the Pell Grant
- State-based grants or scholarships
- Need-based aid offered by the college itself
Red Kite Pro Tip: Complete the FAFSA as early as you can. Some types of need-based aid are first come, first served, and it’s not just federal aid. Submitting early can help your student qualify for state grants and even need-based aid from the college itself, which is money you don’t have to pay back.
What Is Merit-Based Aid?
Merit-based aid is based on achievement, not financial need. It rewards your student for what they’ve done — strong grades, test scores, leadership, sports, arts, community service, and more.
Merit aid can come from:
- Colleges (through automatic scholarships or special applications)
- Private organizations
- Community foundations or local businesses
These awards are often renewable each year if your student keeps up certain requirements, like maintaining a specific GPA or staying involved.
The key takeaway for parents: Encourage your student to highlight what makes them stand out. Academic performance, extracurricular activities, volunteer work, and leadership roles can all lead to merit-based opportunities.
Can You Qualify for Both?
Yes! And many families do. Colleges often combine need-based and merit-based aid in the same financial aid package. For example, your student might receive a merit scholarship from the college for their achievements and also get need-based grants from the state.
This is why it’s so important to apply everywhere you’re eligible and meet every deadline. Together, need-based aid and merit-based aid can significantly lower the actual cost your family pays out of pocket.
What’s Next
Need-based aid and merit-based aid can work together to make college more affordable, but understanding how to qualify for both doesn’t always feel simple.
In this week’s Red Kite’s Parent Email, we’ll cover:
- How schools decide what your family can pay
- How merit and need can stack
- What you can do now to help your student qualify for more
We’re here to make this easier so you can feel confident about the next step, not overwhelmed by it.
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