Financial aid usually refers to funding provided for students to help them pay tuition and other costs during their university of college years – this might include food, clothing, a room, rent, education and books. A scholarship is similar to financial aid and is sometimes the same thing. Government funding for public education is not the same as financial aid. Usually financial aid is set aside for specific students and is not awarded to everyone. There are two types of financial aid: need based and merit based. Merit based financial aid includes scholarships given out by colleges and universities as well as merit scholarships awarded by outside, separate organizations that contribute to scholastic success. Merit scholarships are generally given out because of high academic achievement, outstanding talent, great leadership potential and other various characteristics. Financial need of the applicant or student is often not taken into consideration when merit scholarships are awarded. Sports scholarships are an example of merit based aid where athletic ability is the main characteristic taken into account, and financial stability of the athlete is not. Financial aid that is need based is usually given out to students that really need the money, and cannot otherwise get the education they desire. In order to obtain a federal need based sum of money applicants must fill out a FAFSA form, or Free Application for Federal Student Aid. The application takes into account the student’s finances, the family finances, whether the student has siblings in college, and grades / GPA among other things. The financial aid application calculates income and assets in order to figure out the Expected Family Contribution (EFC) toward the year’s education. The EFC for every student is different, and therefore the type of financial support varies. The Federal Student Aid application must be completed every year in order to be eligible to receive financial aid from the government. The US government provides money grants to students in the form of Federal Perkins Loans, Federal Work Study, Federal Stafford Loans, Federal Parent Loans, Pell Grants, SEOG Grants, and SSIG Grants. Often, specific education institutions will offer unique financial assistance to students including need based, merit based, or scholarship grants. Financial aid for students is basically free money based on merit or basic need.
For more information please visit The US Department of Education or the the following resource, within About.com for Canadian student financial aid.