What Is Need-Based Financial Aid?

Need-based financial aid is money allotted to certain individuals based on their financial need. Such financial assistance is distributed for a variety of reasons, but the two most common might be for education and living assistance. This means students who need help paying for school and low-income individuals who need public aid for food, clothing, housing, and medical costs benefit from need-based financial assistance.

For students, there are two main kinds of financial aid: those based on merit and those based on need. They differ in the reasons for their allotment. Merit-based financial aid is awarded to students who excel at academics, sports, or some other interest to the school. On the other hand, need-based financial aid is distributed to students who cannot afford the school’s tuition but who otherwise are eligible to attend.

Students can acquire need-based financial aid in a variety of ways. Colleges, universities, and private for-profit schools can establish their own aid programs and determine whether an applicant is eligible for financial assistance based on his or his family’s income. Students can also apply for government-funded financial aid. In the United States, this program is called the Free Application for Federal Student Aid (FAFSA) and can determine need-based eligibility on federal, state, and even institutional levels. Whether this money is provided in the form of grants, loans, or scholarships is often up to the institution or organization providing it.

Other examples of need-based financial aid are on a public aid level. Perhaps the most well-known models are the public welfare programs many countries have established. Program benefits can differ, but they tend to include financial assistance for food, clothing, health care, and housing. Some provide additional assistance for women who are pregnant, or specifically for young mothers. Eligibility for these aid programs varies by country, as does the length of time and conditions under which a person can receive benefits.

Not every kind of need-based financial aid for the public requires such large-scale enrollment. For example, many health care and dental establishments are founded specifically for low-income individuals. Sometimes, these medical and dental offices are open to everyone, but charge on a sliding fee scale for lower-income people. Based on eligibility requirements, these people can receive free or low-cost services. Typically, this kind of public aid does require proof of income and some sort of period-based enrollment, but it’s not the same as larger government programs.