College Success, Financial Literacy, And Key Concepts For Students Practice Test

The main idea is distinguishing what each type of scholarship uses to decide who gets funded. Needs-based awards are awarded based on financial need—if paying for college would be a hardship, these funds help. Merit-based awards are earned for achievements—strong grades, high test scores, talents in arts or athletics, leadership, or other notable accomplishments. Many programs actually use both criteria, offering aid to students who demonstrate need and also meet a merit standard. In practice, need is typically shown by financial aid forms like the FAFSA (and sometimes the CSS Profile), which capture family income, assets, and household size. Merit is evaluated from academic records, portfolios or auditions, competitions, or proven talents. While athletic ability and community service can play a role in some scholarships, they do not define the general difference between needs-based and merit-based awards, and merit-based funds aren’t limited to community service either. Scholarships exist for undergraduates and graduates, and they aren’t determined solely by income.