How does GPA affect financial aid?

The price of college has soared in recent years.
The price of college has soared in recent years.
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As the four-year college tuition continues to stretch toward the quarter-million-dollar mark, it's no longer just low-income students who find themselves at a loss. Middle-class families are being priced out of higher education as costs for tuition and fees increase at record rates every year. Columbia University in New York charged more than $51,000 per year as of 2008 [source: Weiss]. That's for the same four-year degree that cost $20,000 in 1990 [source: Weiss].

Two-hundred-thousand dollars is simply out of range for most students. Even the $40,000 charged by some state schools is a tough amount to cover. Which is why financial aid is now a $168 billion per year industry, with most U.S. undergraduates receiving some sort of monetary assistance in their pursuit of a bachelor's degree [source: CollegeBoard]. There are a lot of options available when it comes to financing higher education, including federal and state loans, private loans, and various types of scholarships and grants. Some of these forms of assistance are fairly easy to obtain. Others, namely the scholarships and grants (which don't have to be repaid), are extremely competitive.

There are basically two types of aid available: need-based and merit-based. Need-based aid is determined almost solely on income level. The lower the income, the more aid can be offered. Merit-based aid, on the other hand, is awarded based on achievement, whether academic, athletic or in some extracurricular discipline. National scholarships, the most competitive types of aid, are typically solely merit-based.

The one thing all types of aid have in common, aside from making college more affordable, is the necessity to apply oneself to the studies at hand, whether that's in order to qualify for assistance or to maintain eligibility for money already granted. Grade point average (GPA) is a big part of that. In this article, we'll examine the effects of grade point average on financial aid awards. GPA factors in both before and after the application process.

The biggest hurdle in the financial aid process is securing assistance in the first place. And whether the program is based on need or merit, GPA plays a role.