Financial Aid: Merit-based vs. Need-based

By Tom

Before I get into the meat of this post, I want to say a brief word about financial aid at the University of Richmond. Richmond has been consistently recognized for its strong financial aid programs, and we remain committed to making a Richmond education affordable to every student we admit. Our president, Ed Ayers, has emphasized this commitment, particularly in light of the current financial climate – we are lucky not to have taken nearly as large a hit as some have, and our generous financial aid policies will continue uninterrupted. This year, in fact, students are receiving more than $49 million in financial aid.

This brings me to the main point of my post, which is purely terminological and for your own edification. The biggest distinction you need to know in the world of financial aid is the differentiation between Merit-Based Aid and Need-Based Aid.

Merit-Based Aid is just what it sounds like: aid based on your merit, or money you have “earned” for one reason or another. This includes what we traditionally think of as scholarships, whether academic, athletic, or otherwise. Merit-based awards can come from colleges or from other sources, and include everything from a university’s flagship scholars program, to the Coca-Cola Scholars, to your local Rotary Club leadership award, to Division I athletic scholarships, to college scholarships based on a particular area of achievement like the fine arts or community service. Anything you compete for, or anything based on your personal qualities or achievements, is merit-based aid.

Need-Based Aid is also what it sounds like: aid based on your financial need. This type of aid does not consider you or your achievement or personal characteristics in any way, but rather looks strictly at your family finances to determine whether you are eligible for aid or not. This is the type of aid we associate with the FAFSA form or CSS profile, and it includes institutional grants, loans, and work-study, as well as some forms of federal funding like Pell Grants. It’s important to note that just because you are eligible for a college’s need-based aid does not mean you are guaranteed to receive it; that can depend on the individual college’s policies (there are only about 70 colleges in the country that guarantee they will truly meet 100% of your need, and the University of Richmond is one of these).

The reason that things sometimes get confusing is that not all financial aid can be neatly separated into these two categories. Some merit-based awards will take financial need into account; for example, my high school awarded a scholarship each year that was based on high academic achievement, but the recipients were also required to demonstrate some level of need for the money. Many colleges will consider financial need when awarding their merit-based scholarships, while others will do the reverse and consider your academic merits before determining how much need-based aid they award to you.

I am proud to say that the University of Richmond is not a school that mixes the two types of aid. Our merit-based awards and our need-based program are distinct from one another, and we are grateful for the resources to make this a reality. When you are considered for the Richmond Scholars or Presidential Scholars program, we look strictly at your academic and personal merit, without any regard for your financial background. And when you apply for our Richmond in Reach program, we look strictly at your family finances and promise to meet 100% of whatever need you demonstrate. Our resources enable us to provide significant financial aid to both the exceptionally meritorious and those with financial need, without catches or restrictions on either part. Some people, of course, fall into both categories, and they often reap the benefits of both sources, with the two types of aid supplementing one another.

(The only exception to this rule, to my knowledge, is our Bonner Scholars Program: it is a community service-based scholarship that does take some financial need into account.)

One other important distinction I would note before I close out here: Grants vs. Loans. Many of you are probably aware of this already, but if you’re not it’s crucial to know. Grant Money is “free money.” It does not need to be repaid. Loans do, of course, have to be repaid over time. (And one last plug for Richmond: we cap the student loan/work-study portion of your need-based aid package at $4000, and award the rest in grant money.)

Post a Comment

Required fields are marked *

%d bloggers like this: