Scholarship Types: The 2 Most Common Ways to Fund Your Education

Staring at the price of college can make anyone panic, but scholarships offer real hope if you know where to look. What trips up most people? Not realizing that almost all scholarships boil down to just two main types.

The first—and often the one everyone hears about—is the merit-based scholarship. Think great grades, stand-out talents in sports or music, or even leadership in your community. If you can show you’ve gone above and beyond, schools and private funds are eager to reward you. And get this: about 1 in 8 undergrads win some type of merit aid, so it’s not as unreachable as it might seem.

• Merit-Based Scholarships Explained
• Need-Based Scholarships Demystified
• How to Boost Your Chances
• Common Mistakes to Avoid

Merit-Based Scholarships Explained

Let’s talk straight: merit-based scholarships are rewards for the work you’ve already put in—no strings about your family’s income. These are for students who stand out, whether it’s in the classroom, on the field, or with a unique talent. And it’s not always about being the absolute best; sometimes showing real improvement or leadership counts just as much.

Most colleges offer their own merit scholarships, but private organizations, businesses, and even community groups get in on it too. The good news? You don’t need a perfect SAT score or Olympic skills. Sometimes a special interest, like coding, debate, or even being really involved in volunteering, can land you these awards.

Here’s what most merit-based scholarships look for:

• High GPA (often 3.5 or higher, but not always)
• Strong standardized test scores, like SAT or ACT
• Leadership roles—think school clubs, sports teams, or local projects
• Special talents in music, art, athletics, or science
• Personal essays or recommendations

A cool fact: There are over 30,000 merit-based scholarships in the U.S. alone, according to the National Scholarship Providers Association. And together, they hand out billions every year. Check this out:

Don’t sleep on the local awards either. Sometimes a small town scholarship with just a dozen applicants gives the same boost as a national one that thousands chase. Start with your school, community foundations, and the financial aid office at every college you care about. You’ll be surprised how much free money is out there, just waiting for someone who fits.

Need-Based Scholarships Demystified

When you hear about scholarships, you might picture them going only to the straight-A geniuses or football stars, but that isn’t the full story. In reality, need-based scholarships play a huge role in making college possible for students whose families can’t cover the cost. Last year, over 60% of all undergraduate financial aid was based on financial need, according to the National Center for Education Statistics. That’s huge.

So, what do need-based scholarships actually look at? The number one factor is your family’s financial situation. Programs typically use info from your FAFSA (Free Application for Federal Student Aid)—mainly your household income, number of siblings in college, and family assets. Colleges want to see where you’re coming from financially to decide how much help you might need.

It’s not just the government handing out need-based scholarships. Lots of private organizations, local community groups, and even big-name companies run funds for students who show financial need. Some schools even guarantee that if you get accepted, they’ll meet 100% of your documented financial need—which can amount to tens of thousands of dollars a year.

“Need-based scholarships have helped unlock college opportunities for students who otherwise would have never been able to afford it,” says Cindy Bailey, director of college access at a major urban university.

If you’re wondering how to actually get in the running for this type of help, here are a few must-dos:

• Fill out the FAFSA early—the sooner, the better. Some programs give out funds on a first-come, first-served basis.
• Check out your school’s own application process. Some colleges need extra paperwork or a CSS Profile, not just your FAFSA.
• Don’t skip smaller local scholarships. They add up and sometimes have less competition than national ones.

One more tip: Double-check each scholarship’s definition of financial need. Each group sets its own rules, so what “counts” can change from one place to another.

How to Boost Your Chances

If you’re serious about snagging a scholarship, it’s honestly all about strategy, details, and timing. About $46 billion in scholarships and grants get handed out to college students every year, but lots of free money goes untouched just because people miss the basics or give up too soon.

The number one thing? Know your deadlines. Lots of folks get tripped up and lose out before even sending in an application. Some scholarships close their doors months before school even starts. Make a calendar of all your due dates, right down to the hour—no excuses.

Next: personalize your application. If you’re applying for a merit-based award, show off more than just your GPA. Tell your story. A winning essay usually gives a sense of who you are, not just what you’ve done. Wendy McNabb, a college financial aid advisor, puts it simply:

"The most memorable applications feel like you’re talking with a real person, not just seeing a list of grades."

Here’s what actually moves the needle:

• Line up strong recommendation letters early. Give your references real details about what makes you unique.
• Apply to lots of scholarships, big and small. The little ones add up fast and usually have less competition.
• Proofread—then proofread again. Typos seriously hurt your chances.
• For merit-based scholarships, highlight unique skills, projects, or achievements that set you apart from the crowd.
• For need-based awards, double-check that your FAFSA or other financial forms are totally accurate and submitted on time.

How do your odds stack up? Check out this quick breakdown of the national averages each year:

Some folks aim for ‘full-ride’ scholarships, but honestly, combining smaller ones can pay for just as much. Apply smart and don’t count yourself out—the cash is real, and persistence works.

Common Mistakes to Avoid

Way too many students miss out on free money for school just because of honest mistakes. A lot of people never even realize what went wrong. So, don’t let these common slip-ups trip you up when applying for scholarships:

• Missing deadlines: Every year, thousands of applications get tossed just because they show up late. Most scholarship committees don’t care why you’re late—even if your wifi died or your grandma had a birthday. Set reminders and get things in early.
• Ignoring the instructions: Sometimes it’s as simple as not following directions. Some scholarships want a specific essay length, a certain extra form, or even a handwritten signature. Skipping any step, no matter how small, can knock you out of the running.
• Using the same essay for every application: It’s tempting to copy and paste the same essay, but reviewers can tell. Tailor your answers to match what each scholarship values. It makes a difference.
• Forgetting to proofread: Typos and sloppy writing send a message that you didn't care. Read everything out loud or ask a friend to check it. It’s such an easy win.
• Only looking at big-name scholarships: Sure, big awards sound great, but most applicants flock to these. Local and lesser-known options often have smaller pools and better odds.

Did you know that one survey by Sallie Mae found that nearly half of students who didn’t get scholarships never even applied? That’s wild. One of their education experts summed it up perfectly:

“Applying for scholarships is a numbers game — the more you apply, the better your chances of getting some kind of award.”

And here’s a simple tip: keep a spreadsheet of deadlines, requirements, and passwords for every application. Staying organized means you’re much less likely to slip up. When it comes to scholarship types, the competition isn’t always about being perfect—it’s often just about showing up and paying attention to the details.