Many parents mistakenly believe that their income level means that they will be required to pay full fare for college for each of their children. The notion of $60,000 in annual costs x 4 years x 3 children keeps them up at night—understandably. As does the thought of limiting their children’s aspirations to in-state schools.

In fact, aid is available to most students. But to get it, you need to understand where aid comes from. There are two big pools of aid: need-based aid and merit-based aid.

Need-based aid is generally income-based and results from fairly strict analysis of your FAFSA and/or CSS PROFILE. It’s important to understand that need-based aid can come in the form of loans, work-study or grants.

Merit aid, on the other hand, is almost exclusively in the form of grants. Merit aid generally comes from a school’s own endowment funds, and it’s used to attract the students that the school most wants to attend. Who gets merit aid?

Contrary to popular belief, scholarships are not limited to students who play football or basketball or who have invented a cure for cancer in their spare time. Merit aid is most commonly used to improve the characteristics of the school’s student body profile. What does that mean? Look at the stats that are most commonly published about schools, especially in ranking guides like US News & World Report’s college rankings: median GPA, median SAT/ACT, number of high school valedictorians attending, percent of students in the top 10% of their high school class, etc. Merit aid comes down to this: Would your student’s attendance there make the student body look better? If so, they are likely to get some form of merit aid.