Which of the following financial aids is specifically awarded based on merit or need?

The choice of scholarship as the correct answer is appropriate because scholarships are financial awards that are typically offered based on merit, which might include academic achievements, talents, or extracurricular involvement, and sometimes need, which is assessed through financial circumstances. The key characteristic of scholarships is that they do not need to be repaid, making them a form of aid that can significantly alleviate educational costs for students.

Work-study programs and loans also provide financial aid but function quite differently. Work-study involves students working part-time jobs to help cover their educational expenses, emphasizing employment rather than merit or need as criteria for the aid itself. Loans must be repaid with interest, which does not align with the concept of award-based financial aid. Taxable income refers to income that is subject to taxation and does not relate to a financial aid mechanism. Thus, considering all these factors, scholarships stand out as the best answer for financial aid specifically awarded based on merit or need.