Need Based Vs Non Need Based Scholarships

Scholarships In Nonprofit Management


Need based Vs Non need based scholarships are both financial aid tailored to offset the cost of pursing higher education. While the former is focused on minority or marginalized students, the later focuses on senior citizens.

In recent years, the cost of attending college has significantly increased. On average, students are shelling out close to $51,000 for four years at a private college or university, almost $41,000 for an out-of-state public college, and over $25,000 for an in-state public college. These figures encompass tuition, fees, accommodation, meals, and other miscellaneous expenses, which can be daunting for recent high school graduates.

Consequently, many students turn to various forms of financial assistance such as student loans, grants, or scholarships.

Financial aid has become increasingly crucial for students to bridge the financial gap between tuition fees and their own resources. However, navigating the world of financial aid can be complex.

Financial aid is typically divided into need-based and non-need based categories, and understanding the distinction is essential for optimizing one’s financial aid opportunities.

Need Based Vs Non Need Based Scholarships

What Constitutes Need-Based Financial Aid?

Need-based financial aid refers to monetary support exclusively accessible to students meeting specific income criteria. This implies that either the students themselves or their families lack adequate funds to cover a substantial portion of college expenses independently. In essence, they require additional assistance.

  • To be eligible for need-based aid, it’s necessary to demonstrate a significant financial need, as determined by the federal government through applications such as the FAFSA and loan applications themselves. Since these loans are primarily provided by the government, they come with lower interest rates.
  • Need-based financial aid typically offer deferred payment options, meaning you’re not required to make principal loan payments until after graduating. Additionally, these loans are subsidized, meaning the government covers the interest accrued while you’re in school or for up to six months post-graduation.
  • Perkins financial aid are highly coveted among students with the greatest financial need, featuring a low interest rate of only 5 percent. Subsidized Stafford Loans, also need-based, carry a fixed interest rate of 4.29 percent, with the government covering the annual interest while you’re enrolled in school.

Understanding the Role of the FAFSA

Determining eligibility for need-based status occurs once a student completes the Free Application for Federal Student Aid (FAFSA). This form assesses the financial resources contributed by the student and their family, known as the expected family contribution (EFC).

Your financial need is calculated by subtracting your EFC from your tuition expenses. Higher financial need increases the likelihood of qualifying for need-based financial assistance.

The financial aid office at a school will craft a financial aid package based on both your financial need and the available funding. Submitting the FAFSA early and demonstrating greater financial need enhances the chances of receiving a favorable aid package.

Types Of Financial Assistance Based On Financial Need:

Types of financial assistance based on need include Federal Pell Grants, Federal Supplemental Education Opportunity Grants, Direct Subsidized Stafford Loans, and Federal Work-Study opportunities. Additionally, there may be additional need-based scholarships or grants offered by state or institutional bodies.

What Constitutes Non-Need-Based Financial Assistance?

Non-need based financial aid refers to financial support provided to students who don’t meet the criteria for need-based assistance. This indicates that either the student or their family possesses sufficient income to cover college expenses without significant aid. Essentially, they require less assistance.

  • Non-need-based loans cater to students and families unable to cover the full cost of college, including tuition and associated expenses. These loans target those ineligible for need-based aid due to their personal assets. For a detailed comparison of need-based versus non-need-based financial aid, check out the information provided.
  • Typically, non-need-based loans carry higher interest rates as the government does not cover the interest while the borrower is in school, making them unsubsidized. This means borrowers may need to repay both the principal loan amount and the accrued interest.
  • Unsubsidized Stafford Loans aim to assist families in meeting their financial obligations for college costs without focusing on financial need. With borrowers responsible for interest payments, they have the option to capitalize the interest, adding it to the principal loan amount. While this defers interest payments, it may result in a substantial lump sum due at repayment.
  • Grad PLUS Loans, federally sponsored non-need-based loans for graduate students, typically allow borrowing up to the total cost of education. However, they often come with higher interest rates compared to other loans like unsubsidized Stafford loans, potentially leading to higher overall repayment amounts.

Understanding The Role Of FAFSA

Non-need based assistance is assessed alongside need-based aid through the standard FAFSA application process. Students complete the FAFSA as usual, and their financial requirements are evaluated using their Expected Family Contribution (EFC). Once eligibility for need-based financial aid is determined, non-need based aid is allocated accordingly.

Financial aid offices compile aid packages based on the FAFSA data, considering both EFC and financial need. Once any potential eligibility for need-based aid is addressed, non-need based aid becomes available.

Typically, individuals with higher EFCs have a greater likelihood of qualifying for non-need based aid.

Types of Non-Need Aid

Financial assistance not contingent on financial need encompasses Direct Unsubsidized Stafford Loans, Graduate PLUS Loans, Parent PLUS Loans, and the Teacher Education Access for College and Higher Education (TEACH) Grant.

Need Based Vs Non Need Based Scholarship

Apart from the issue of eligibility, which has been previously addressed, the primary distinction between need-based and non-need-based financial assistance is straightforward. Need-based aid offers greater advantages compared to non-need-based aid. This contrast is most effectively demonstrated through a few examples.

Federal Student Loans:

Federal Student Loans, specifically subsidized and unsubsidized Stafford Loans, exhibit distinct disparities.

For undergraduates, these federal student loans appear largely identical, with one notable exception: the subsidized alternative is overwhelmingly favored.

While enrolled in school and during the six-month grace period, the government covers the accruing interest on a subsidized loan. Once repayment commences, only the principal balance remains.

Conversely, interest on an unsubsidized loan accumulates throughout the schooling period and grace period, with the interest fully capitalized upon the start of repayment.

Opting for a Subsidized Stafford Loan proves to be a notably more economical and advantageous choice.


Comparing Pell Grants, which are based on financial need, and TEACH Grants, which are not, reveals similarities. Pell Grants are available to undergraduates regardless of their major and do not need to be repaid. Similarly, TEACH Grants do not require repayment but necessitate recipients to major in education and commit to four years in the education field post-graduation. However, TEACH Grants entail more conditions and prerequisites compared to Pell Grants.


There have been lots of confusion on what need based Vs Non need based scholarships entail, we hope this articles has provided clarity. To be eligible for financial assistance based on need, students usually need to complete financial aid forms like the FAFSA and CSS Profile. Seeking guidance from a financial aid consultant can be beneficial when exploring your choices and assessing whether you’ve shown financial need.

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