💸 Need-Based vs. Merit-Based Aid

and Why Colleges Might Offer You More if They Think You’ll Enroll

When families start thinking about how to pay for college, one of the first questions is:

“What kind of financial aid can we get?”

The answer usually involves two major types: Need-Based Aid and Merit-Based Aid.

Understanding how they work — and how colleges decide what to offer — can help you make more informed choices during the application process.

📚 What’s the Difference?

Aid Type	What It’s Based On	Where It Comes From	Who Decides
Need-Based Aid	Your family’s financial situation (income, assets, household size, etc.)	Federal gov’t (via FAFSA) and colleges	FAFSA + sometimes CSS Profile
Merit-Based Aid	Your accomplishments (grades, test scores, talents, leadership, etc.)	Primarily colleges themselves	College admissions/aid offices

🏛️ Need-Based Aid: What to Know

• Based strictly on financial need, not grades or test scores.

• Comes from FAFSA, state aid, and sometimes schools directly.

• Schools that are need-blind in admissions won’t consider your finances when deciding admission, but may still have limited aid to offer.

• Others are need-aware, meaning your financial situation can influence both admission and aid decisions.

  
  

✨ Recent Trends in Need-Based Aid:

• The FAFSA has been simplified, but delays in processing caused stress for many families in 2024.

• Some private colleges are increasing need-based aid to compete with public flagship schools and improve accessibility.

• “Gapping” — when a school admits a student but doesn’t offer enough aid to meet full need — is still common, especially at less well-funded institutions.

  
  

🏅 Merit-Based Aid: What to Know

• Awarded for academic achievement, talent, leadership, or other standout qualities.

• Can be used to attract students the college really wants, as well as those it thinks might not attend without extra incentive.

• Merit aid is not tied to FAFSA, though some schools may require it for tracking or eligibility.

  
  

✨ Recent Trends in Merit Aid:

• Many schools are increasing merit aid as a way to boost yield and attract top students — especially test-optional applicants.

• Some colleges are pulling back on merit aid to focus more on financial need, especially elite institutions.

• Out-of-state public universities often use merit aid to draw students from other regions.

  
  

🎯 Aid Is Sometimes Based on How Likely You Are to Enroll

Especially when it comes to merit-based and institutional aid, colleges use something called enrollment management. Translation? Schools may offer better scholarships to students they think are likely to say yes to their offer.

Factors that may influence this:

• Applying Early Decision

• Visiting campus or attending info sessions

• Engaging with admissions (emails, interviews, etc.)

• Geographic or demographic priorities

They’re not just awarding aid because they like you (though they might!). They’re investing in students they think will enroll, succeed, and improve their yield.

🧠 What You Can Do

• Apply early — some aid is first-come, first-served.

• Fill out the FAFSA no matter what — even if you don’t think you’ll qualify.

• Look at each college’s financial aid website to learn what kind of aid they offer and whether they meet full need.

• Don’t assume private = unaffordable — many private colleges offer large merit or need-based packages.

To Summarize...

Need-based aid helps students who can’t afford college on their own. Merit-based aid rewards those who stand out. And sometimes, colleges offer more when they think you’ll choose them.

The best strategy? Build a balanced list of schools, apply early, and stay informed. The right information can save your family thousands, not to mention open doors you didn’t think were within reach.