When it comes to financing higher education, scholarships can make all the difference. But not all scholarships are the same. Two of the most common types – merit-based scholarships and need-based scholarships – offer different paths to support, depending on a student’s academic performance, talents, or financial situation.
In this blog, we’ll break down the key differences between merit-based and need-based scholarships, explore their pros and cons, and help you understand which type may be the best fit for your goals.
What does a merit-based scholarship mean?
A merit-based scholarship is a financial award given to students based on their demonstrated talents, skills, or accomplishments—typically in academics, sports, arts, leadership, or other specialised areas—regardless of their financial need.
Merit-based scholarships are often offered by universities, governments, or private organisations and are designed to attract high-performing students. To qualify, applicants usually need to meet specific criteria such as a high GPA, standardised test scores, or a proven track record in a particular field. Unlike need-based scholarships, merit awards focus purely on performance, potential, or skill.
How is a need-based scholarship defined?
A need-based scholarship is financial aid awarded to students primarily or exclusively on the basis of their demonstrated financial need, rather than their academic, athletic, or extracurricular achievement.
Need-based scholarships aim to support learners who show academic promise but may struggle to afford fees, or other education-related costs. To determine eligibility, institutions or organisations typically review information such as family income, household size, and overall financial need.
Unlike merit-based scholarships, need-based awards focus on ensuring that capable students have equal access to higher education, regardless of their economic background. They are an important tool for promoting equity and reducing barriers in education.
What are the differences between a merit-based scholarship and need-based scholarship?
The main difference between merit-based and need-based scholarships lies in the eligibility criteria. Merit-based scholarships are awarded based on a student’s academic achievements, talents, or leadership abilities, regardless of financial background. In contrast, need-based scholarships are granted to students who demonstrate financial need, often assessed through income and personal financial information.
Another key distinction is the application process. Merit scholarships may require high grades, test scores, or a portfolio of achievements, while need-based scholarships usually involve submitting financial documents or income statements.
In short, merit-based scholarships reward performance, while need-based scholarships support access, both serving different but important roles in making education more attainable. Below, we will examine further the distinctions between the two types.
1. Eligibility Criteria Differences Between Merit-Based and Need-Based Scholarships
The eligibility criteria for merit-based and need-based scholarships are fundamentally different.
Merit-Based Scholarships Eligibility Criteria:
- Based on Achievement: Selection depends on demonstrated excellence—academic (GPA, standardised test scores), athletic, artistic, or leadership accomplishments.
- No Financial Restrictions: Anyone who meets the achievement criteria can apply, regardless of income or financial background.
- Common Requirements:
- High academic record (often a minimum GPA)
- Standardised test scores
- Portfolios for the arts or athletics
- Essays about leadership or achievements
- Letters of recommendation
- Ongoing Eligibility: Renewability may depend on maintaining performance (e.g., specific GPA or continued involvement in relevant activities).
Need-Based Scholarships Eligibility Criteria:
- Based on Financial Need: Selection is determined solely (or primarily) by the financial situation of the student and their family.
- Required Financial Documentation: Applicants must provide detailed information such as family income, assets, household size, and number of dependents.
- No Achievement Requirement: Generally, there is no minimum academic or extracurricular achievement needed (although some programs may expect satisfactory academic standing for renewal).
- Eligibility is Income-Limited: Aid is limited to low or moderate income students whose families cannot afford the full cost of attendance.
- Annual Review: Many need-based scholarships require students to re-submit financial documents each year to assess ongoing eligibility.
Understanding these distinct eligibility criteria will help you determine which scholarships best fit your background and improve your odds of receiving support.
2. Application Requirements Differences Between Merit-Based and Need-Based Scholarships
The application process for each scholarship type reflects their focus – either on performance or financial need.
Merit-Based Scholarship Application Requirements:
- Academic transcripts (GPA or equivalent)
- Standardised test scores (if applicable)
- Personal statement or essay
- Letters of recommendation
- Portfolio (for arts or creative scholarships)
- Proof of awards, honours, or achievements
Need-Based Scholarship Application Requirements:
- Completed financial aid application
- Income statements or tax documents
- Proof of household expenses or dependents
- Sometimes academic transcripts (to meet basic academic standards)
- Personal statement explaining financial situation
The key difference is that merit-based applications emphasise achievement, while need-based applications focus on financial documentation.
3. Differences in Funding Sources Between Merit-Based and Need-Based Scholarships
Scholarships can come from a variety of sources, and the type of scholarship often determines who funds it.
Merit-Based Scholarships Are Funded By:
- Universities (to attract top-performing students)
- Private organisations or corporations (seeking to support talent or build brand prestige)
- Government bodies (for national academic excellence programmes)
- Foundations or NGOs (supporting leadership, innovation, or specific talents)
Need-Based Scholarships Are Funded By:
- Governments (to promote access and equity in education)
- Universities (as part of their commitment to diversity and inclusion)
- Charities and NGOs (focused on social development or poverty alleviation)
- Educational access programmes (local or international)
Overall, merit-based scholarships often aim to reward potential, while need-based scholarships aim to level the playing field.
4. Renewal Differences Between Merit-Based and Need-Based Scholarships
Most scholarships are not one-time awards; they come with renewal conditions that vary based on the type.
Renewal of Merit-Based Scholarships
- Renewal Based on Continued Achievement: Recipients must typically maintain the level of performance or excellence that earned the scholarship. This often includes:
- Maintaining a minimum GPA each academic term or year.
- Continued participation in related activities (leadership, sports, arts) if applicable.
- Sometimes fulfilling service, leadership, or extracurricular commitments.
- Annual Academic Evaluation: Academic standing is reviewed—falling below standards may result in loss of funding.
- Additional Reporting: Students may need to submit updated transcripts, progress reports, or recommit to specific activities.
Renewal of Need-Based Scholarships
- Renewal Based on Financial Eligibility: Students must demonstrate ongoing financial need each year:
- Submission of updated financial documents (income statements, tax returns, aid forms).
- Family circumstances are reassessed; a significant increase in income or assets may reduce or eliminate eligibility.
- Academic Progress: Most require students to meet basic academic progress standards (such as not being on academic probation), but the minimum bar is usually lower than for merit awards.
- Annual Financial Review: Renewal is contingent on the student’s continued inability to pay, so that the process can feel more administrative, with a strong focus on updated financial data.
In short, merit-based scholarships focus on sustained excellence, while need-based scholarships focus on sustained need – both with the goal of supporting students throughout their academic journey.
5. Demographic Reach Differences Between Merit-Based and Need-Based Scholarships
The demographic reach of merit-based and need-based scholarships varies depending on the goals of the awarding body and the criteria set for recipients.
Merit-Based Scholarships: Who They Typically Reach
- High-performing students across all income levels
- Students from well-resourced schools or communities with access to quality education
- Applicants with strong academic, athletic, or creative backgrounds
- Often concentrated in urban or private school environments, where more opportunities to excel may exist
Because these scholarships reward achievement, they can sometimes unintentionally favour students with greater access to resources and support, rather than those who need financial help the most.
Need-Based Scholarships: Who They Typically Reach
- Students from low-income families or under-resourced communities
- First-generation university students
- Learners in rural or underserved areas
- Applicants from marginalised or underrepresented groups
Need-based scholarships are designed to improve educational equity, often targeting populations that face financial or systemic barriers to accessing higher education.
What Are the Overall Pros and Cons of Merit-Based Scholarships Compared to Need-Based Scholarships?
Both merit-based and need-based scholarships offer valuable opportunities to support students, but each comes with its own advantages and limitations. Understanding the pros and cons of each type can help students, parents, and educators make more informed decisions.
Pros of Merit-Based Scholarships
- Reward for excellence: Encourages and recognises hard work, talent, and dedication.
- No financial barrier: Open to students from all economic backgrounds.
- Can boost university reputation: Often used to attract top-performing students.
- Prestige and confidence: Being awarded for merit can enhance a student’s academic profile.
Cons of Merit-Based Scholarships
- May favour privileged students: Those with better resources often have more opportunities to excel.
- Highly competitive: Limited spots available and often many applicants.
- Less focus on access: Doesn’t help students who are capable but financially disadvantaged.
- Performance Pressure: Students often must maintain high grades or continued achievements to keep their funding, which can add stress.
Pros of Need-Based Scholarships
- Promotes equal access: Designed to help students from low-income backgrounds afford education.
- Reduces financial stress: Helps cover tuition, living costs, and other academic expenses.
- Encourages diversity and inclusion: Supports students from varied backgrounds and regions.
- Empowers capable but underserved learners: Ensures potential isn’t limited by financial barriers.
Cons of Need-Based Scholarships
- Financial disclosure required: Applicants may need to submit personal financial information.
- Limited to those who qualify financially: Students slightly above the income threshold may be excluded.
- Academic criteria still matter: Some programmes still expect a minimum academic standard, which can be a barrier if support systems are lacking.
What Are the Benefits of a Merit-Based Scholarship Compared to a Need-Based Scholarship?
Merit-based scholarships come with several unique benefits that distinguish them from need-based options. These benefits are particularly appealing to students who have invested time and effort into academic or extracurricular excellence.
1. Recognition of Achievement
Merit-based scholarships reward hard work, talent, and dedication, offering public recognition for accomplishments in academics, sports, arts, or leadership.
2. Open to All Financial Backgrounds
These scholarships are available to students regardless of income, giving high-achievers from any background a chance to earn financial support.
3. Motivation to Perform
They serve as an incentive for students to maintain high academic or performance standards, encouraging a culture of excellence.
4. Enhances Student Profile
Winning a merit-based award can boost a student’s academic or professional credibility, helping them stand out in university applications or job markets.
5. Often Renewable
Many merit-based scholarships are renewable, provided the student continues to meet the performance criteria, offering long-term financial support.
What Are the Benefits of a Need-Based Scholarship Compared to a Merit-Based Scholarship?
Need-based scholarships provide vital support for students who face financial barriers, making higher education more accessible to those who need it most.
1. Promotes Educational Equity
Need-based scholarships bridge the financial gap, helping students from low-income or marginalised backgrounds access quality education.
2. Focus on Potential, Not Just Performance
These scholarships look beyond grades, recognising that some students may not have had access to the same resources but still show strong potential.
3. Reduces Dropout Rates
By easing the financial burden, need-based scholarships help students stay enrolled and focused, reducing the risk of dropping out due to cost.
4. Encourages Diversity
They support a more inclusive academic environment by enabling students from various backgrounds, regions, and experiences to participate in higher education.
5. Addresses Real-Life Barriers
Need-based funding acknowledges economic challenges, helping students cover not just tuition but also essentials like housing, transport, and books.
Final Thoughts
When it comes to choosing between merit-based and need-based scholarships, there’s no one-size-fits-all answer. Each type serves a different purpose and supports students in unique ways.
Merit-based scholarships reward dedication, talent, and academic achievement. They are ideal for students who have consistently performed well and want recognition for their efforts. On the other hand, need-based scholarships focus on creating opportunities for learners who face financial challenges, ensuring that access to education is not limited by economic barriers.
Key Considerations:
- Understand the eligibility requirements before applying.
- Assess your financial situation and academic background honestly.
- Don’t hesitate to apply for both types if you’re eligible – many students qualify for a combination.
- Keep in mind that some universities or organisations offer automatic merit-based scholarships to students with a strong academic or professional profile.
- Always check the renewal conditions to make sure you can maintain the scholarship over time.
- Look into the funding sources to ensure the scholarship aligns with your goals and values.
Unicaf supports both high-achieving students and those in financial need by offering generous scholarships toward internationally recognised degrees. With flexible online study options and partnerships with well-respected universities, Unicaf makes it easier for learners to access quality higher education regardless of their background or financial situation.In the end, both scholarship types contribute to a more accessible and rewarding educational experience. Whether you’re aiming for excellence, seeking opportunity, or both, the right scholarship – through platforms like Unicaf – can be a powerful step toward achieving your academic and professional goals.
