An Introduction to Financial Aid: Types of Financial Aid

Types of Financial Aid There are two major categories of aid: merit-based and need-based.

Merit-based aid is generally awarded in recognition of special skills, talent and/or academic ability, with little or no attention given to the family's ability to pay educational costs.

Need-based aid, as the name implies, is awarded based on the financial need of the applicant and his or her family.

Federal unsubsidized loan programs are not need-based, but they nevertheless are an important source of funding for many students and families. These include the Federal Unsubsidized Stafford, Direct Unsubsidized, Federal PLUS, and Direct PLUS loans.

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Adapted with permission from "Financing Education Beyond High School,"
a presentation by the National Association of Student Financial Aid Administrators.