A merit-based scholarship is a type of financial aid that's awarded to students based on their academic, athletic, or other metrics. The scholarship doesn't care about your needs but rather focuses on you "deserving" the aid. So, for instance, if you're really good at football, many universities would offer you financial support so that you study there, add value to their team, and grow as a player. Similarly, if you have an excellent academic background or are exceptional in a certain area or in a certain way, the university or awarding organization may deem you fit for a merit-based scholarship.