What is the difference between a Merit Scholarship and Need-Based Financial Aid



Sewickley Academy's Private School Blog

Small classes sizes, a truly dedicated faculty and staff, access to competitive sports teams, and world-class art programs are some of the many reasons that families choose independent schools each year. The decision to attend an independent school also includes the responsibility of the family to pay tuition. While independent schools recognize that the family has the primary responsibility to pay tuition, most schools have some sort of financial aid program to help families that would otherwise be unable to afford an independent school.

It’s true that the financial aid process can be confusing, forcing a family to learn a new vocabulary, pay attention to deadlines, and try to understand a completely foreign process. Financial aid at independent schools falls into one of two categories: merit scholarships and need-based financial aid. There are many differences between these two types of aid, and I’d like to help you better understand them.


The most common type of financial aid at independent schools is need-based financial aid. This type of aid is awarded to a family strictly based upon their financial need.

In order to determine a family’s financial need, most independent schools use a third-party need-based financial aid analysis service such as The Financial Aid for School Tuition (FAST), School and Student Services by NAIS (SSS), and Private School Aid Service (PSAS).

Applying for need-based financial aid is usually a two-step process:

  • Step 1 – The family must complete the application with the third-party service.
  • Step 2 – The family must submit copies of their Federal Tax Return, State Tax Return, any tax return schedules, and all W2′s.

The financial aid service will then evaluate all of the information and make a recommendation indicating what a family should reasonably contribute toward tuition.

There are two important facts to remember with regard to need-based financial aid for all schools that are members of the National Association of Independent Schools (NAIS). These are from the Principles of Good Practice for Financial Aid Administration created by NAIS:

  1. The school continues to provide support to students as long as financial need is demonstrated. This means that you can expect to receive need-based financial aid for as long as a child is enrolled in school and the family continues to show a demonstrated financial need.
  2. The school maintains the same standards of behavior and academic performance for recipients of financial aid as it does for non-recipients. This means that a school can not take away need-based financial aid as a result of poor behavior or poor grades. The only way an independent school can take away need-based financial aid is if a family fails to show a demonstrated financial need.


Merit scholarships, on the other hand, are not dependent upon a family’s financial need. Merit scholarships are most commonly awarded one of two ways: a student’s connection with an affinity group or for a student’s academic, athletic, or artistic ability.

The most common type of merit scholarship is one that is given for a student’s academic, athletic, or artistic ability. The scholarship amounts vary by school but can range from $500 to full tuition. The dictionary defines ‘merit’ as “character or conduct deserving reward, honor, or esteem.” Independent schools attempt to identify students who, because of a special skill or ability, would be contributing members of that school’s community.

The second most common type of merit scholarship is one that is designed for a student who is connected with an affinity group or organization, e.g. a student could apply to receive a merit scholarship because a parent works at a local hospital.

Unlike need-based financial aid however, merit scholarships do not have to be given each year and most importantly, they can be taken away from a student for lack of performance.

Good luck as you begin your journey with financial aid, and if you have any questions please don’t hesitate to ask them in the comments section below.