When it comes to financing your education, both grants and scholarships are two of the most common forms of financial aid. While they share similarities in that they do not require repayment, there are key differences between the two. Understanding these differences can help you make more informed decisions about how to fund your studies and navigate the often complex landscape of financial aid.
In this article, we’ll explore what grants are, how they differ from scholarships, and when and why you might choose one over the other.
What Are Grants?
Grants are a form of financial aid that are typically awarded to students based on financial need, although some grants may be based on specific academic, professional, or demographic criteria. Unlike loans, grants do not need to be repaid, making them an attractive option for students looking to reduce their educational costs. Grants are often offered by the federal or state government, as well as private organizations, foundations, and educational institutions.
Types of Grants
There are several types of grants available to students, each with different eligibility requirements:
- Federal Grants:
- Pell Grant: One of the most well-known federal grants, the Pell Grant is awarded to undergraduate students based on financial need. The amount awarded varies depending on financial need, cost of attendance, and other factors.
- Federal Supplemental Educational Opportunity Grant (FSEOG): This grant is awarded to students with exceptional financial need. It is administered by colleges and universities, with amounts varying depending on available funding at the institution.
- TEACH Grant: This grant is available to students who plan to become teachers in high-need fields and agree to work in a low-income school for a certain number of years.
- State Grants:
- Many states offer their own grants to residents who meet specific eligibility requirements. These grants may be need-based or designed to support students pursuing specific careers, such as teaching or healthcare.
- Institutional Grants:
- Some colleges and universities provide their own grants to students, typically based on financial need or academic achievement. These grants can be awarded in addition to federal or state grants.
- Private Grants:
- Private organizations, foundations, and non-profits may also offer grants to students pursuing higher education. These grants can be based on various criteria such as academic merit, community service, or the student’s chosen field of study.
How Grants Are Awarded
Grants are typically awarded based on the student’s financial need or specific criteria outlined by the grant provider. For federal grants, the Free Application for Federal Student Aid (FAFSA) is the most common way to apply. The FAFSA assesses your financial need by considering factors such as family income, household size, and the number of family members attending college.
Once your application is processed, the government or grant provider will determine how much financial aid you qualify for, which may include grants, loans, or work-study opportunities.

What Are Scholarships?
Scholarships are another form of financial aid that, like grants, do not require repayment. However, unlike grants, scholarships are usually awarded based on merit, such as academic performance, athletic ability, artistic talent, or leadership qualities. Scholarships may also be awarded based on other factors like ethnicity, gender, or a student’s intended field of study.
Types of Scholarships
- Merit-Based Scholarships:
- These scholarships are awarded to students who demonstrate high academic performance, outstanding athletic ability, or excellence in other areas such as music or the arts.
- Need-Based Scholarships:
- While grants are primarily need-based, some scholarships are also awarded based on financial need. These scholarships are typically given to students who come from lower-income backgrounds.
- Subject-Specific Scholarships:
- These scholarships are awarded to students who plan to study a particular field, such as engineering, medicine, or the humanities.
- Demographic Scholarships:
- Many scholarships are awarded to students from specific demographic groups, such as women, minorities, or first-generation college students.
- Institutional Scholarships:
- Colleges and universities often offer scholarships to students based on academic performance or other factors. These can include both merit-based and need-based scholarships.
- Private Scholarships:
- Various private organizations, businesses, and foundations offer scholarships. These may have specific eligibility requirements, such as being a child of an employee, a participant in a particular community organization, or pursuing a particular career path.
How Scholarships Are Awarded
Scholarships are typically awarded based on merit, although some may take financial need into consideration as well. Scholarship applications often require you to submit essays, recommendation letters, test scores, or other documentation to demonstrate why you are deserving of the award. Some scholarships may require ongoing eligibility, such as maintaining a certain GPA, while others may be one-time awards.
Key Differences Between Grants and Scholarships
While grants and scholarships both provide financial assistance that does not need to be repaid, they have some distinct differences. Here’s a breakdown of the key differences:
Factor | Grants | Scholarships |
---|---|---|
Eligibility Criteria | Primarily need-based (financial need) | Primarily merit-based (academic, athletic, artistic, etc.) |
Purpose | To help students pay for their education when they cannot afford it | To reward and encourage students for academic or extracurricular excellence |
Application Process | Typically requires FAFSA (financial need) | Requires an application, essays, letters of recommendation, etc. |
Award Amount | Varies based on financial need and program | Varies based on merit or achievement, sometimes very large |
Renewability | May be renewable (usually requires continued financial need) | May be renewable (requires continued achievement or performance) |
Restrictions | Often limited to specific fields of study or need categories | Can be restricted by academic performance, field of study, or other factors |
Which One Should You Pursue: Grants or Scholarships?
Whether you should apply for grants or scholarships depends on your individual circumstances. Here are some factors to consider:
- Financial Need:
- If you have significant financial need, grants are often the best option, as they are designed specifically to assist students who might otherwise not be able to afford college. Federal grants like the Pell Grant are a great place to start.
- Merit and Achievements:
- If you have strong academic credentials, excel in a specific extracurricular activity, or have achieved recognition in a certain field, scholarships may be a better fit. Merit-based scholarships can offer substantial awards and recognition for your hard work and talents.
- Combination of Both:
- Many students qualify for both grants and scholarships. Applying for both types of financial aid can maximize the amount of assistance you receive, helping to reduce your overall educational costs.
- Time and Effort:
- Grant applications typically require fewer steps, as they are often awarded based on the FAFSA or state aid applications. Scholarships, on the other hand, may require more effort, such as writing essays or submitting additional materials.
Final Thoughts
Both grants and scholarships are excellent sources of funding for your education, and neither requires repayment. Grants are generally need-based and focus on helping students with financial limitations, while scholarships are often merit-based and reward students for their achievements. By understanding the differences between the two, you can make more informed decisions about your financial aid strategy and increase your chances of securing the funding you need to pursue your academic and career goals. Whether you qualify for one or both types of financial aid, these opportunities can provide significant financial relief and make your education more accessible.