Personal loans and student loans are common types of unsecured debt.
What is merit aid?
Merit aid is financial aid given to students based on their academic accomplishments, musical, artistic, or athletic talent, or other special abilities. Merit aid is independent of a student’s financial need, but can be supplemented by student loans and other scholarships.
Merit aid is sometimes offered by colleges and states in order to attract some of the top talent. There are thousands of merit-aid-based scholarships totaling billions of dollars.
Merit aid can make up the difference for the students whose family earns too much to qualify for needs-based financial aid but not enough that college tuition isn’t a significant burden. However, students who can already afford college may also be eligible for merit aid to further supplement their tuition.
Merit aid is frequently awarded on the strength of a student’s scores on standardized tests like the SAT and ACT as well as their grades. But students who have demonstrated excellence in art, athletics, or music are also considered for merit aid, although they may be expected to continue pursuing those interests in college.
Private and nonprofit organizations also frequently offer merit aid, often based on a student’s participation in activities related to the organization’s goals, such as politics or community service.
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Merit aid example
Jessica is a student who has just completed high school. She received excellent scores on the SAT and was an active participant in many clubs. She was especially skilled in debating and went on to win several debate championships. Thanks to her debating skills, a Washington, D.C.-based think tank offered her merit aid based on her interest in studying politics in school.