student loans

Types of financial aid
Financial aid may be classified into two types based on the criteria through which the financial aid is awarded: merit-based or need-based.
Merit-based
Merit-based scholarships include both scholarships awarded by the individual college or university and those awarded by outside organizations. Merit-based scholarships are typically awarded for outstanding academic achievements, although some merit scholarships can be awarded for special talents, leadership potential and other personal characteristics. Scholarships may also be given because of group affiliation (such as YMCA, Boys Club, etc.). Merit scholarships are sometimes awarded without regard for the financial need of the applicant. At many colleges, every admitted student is automatically considered for merit scholarships. At other schools, however, a separate application process is required.
Athletic scholarships are a form of merit aid that take athletic talent into account.
Need-based
Need-based financial aid is awarded on the basis of the financial need of the student. The Free Application for Federal Student Aid (FAFSA) is generally used for determining federal, state, and institutional need-based aid eligibility. At private institutions, a supplemental application may be necessary for institutional need-based aid.
The flaws of financial aid
People who save and spend conservatively are often denied financial aid. While the application is intended to evaluate financial need, it often drastically reduces the aid packages of students who really could use the money. Since much of the formula for EFC (expected family contribution) is based on parental assets, students whose parents aren't giving them money for their educations are forced to take out large student loans.