The Short Answer
Both grants and scholarships are free money for college that doesn't need to be repaid. The primary distinction is that grants are typically need-based (awarded based on financial circumstances) while scholarships are typically merit-based (awarded for academic achievement, talents, or other criteria). But the line blurs in practice — many scholarships consider need, and some grants consider merit.
What Are Grants?
Grants are financial aid awards given primarily based on demonstrated financial need. They come from multiple sources:
Federal Grants
- Pell Grant: The largest federal grant program. Awards up to $7,395/year (2024–25) to eligible undergraduates. Eligibility determined by FAFSA. If your Expected Family Contribution (EFC) is below a certain threshold, you qualify.
- Federal Supplemental Educational Opportunity Grant (FSEOG): Additional $100–$4,000/year for students with exceptional financial need. Not all schools participate.
- Teacher Education Assistance for College and Higher Education (TEACH) Grant: Up to $4,000/year for students committed to teaching in high-need subjects at low-income schools.
- Iraq and Afghanistan Service Grant: For students whose parent died in military service in Iraq or Afghanistan.
State Grants
Most states have their own grant programs for in-state students. Examples: Cal Grant (California), TAP (New York), OSFA (Florida). Eligibility and amounts vary significantly by state. Check your state's higher education agency website for programs available to you.
Institutional Grants
Colleges themselves award grants from their endowments to students with financial need. Private colleges with large endowments can be very generous. Some elite schools promise to meet 100% of demonstrated need for families under certain income thresholds.
What Are Scholarships?
Scholarships are awards typically based on merit, talent, or other specific criteria. Sources include:
- Institutional merit scholarships: Colleges award these to attract high-achieving applicants. These can range from small discounts to full-tuition awards.
- Private scholarships: Awarded by foundations, corporations, community organizations, and professional associations
- Athletic scholarships: Awarded by colleges to recruited athletes through NCAA programs
- Departmental scholarships: Specific to declared majors, often awarded by departments rather than the financial aid office
How to Maximize Both
To maximize grants: file FAFSA as early as possible, research state grant deadlines (often earlier than federal deadlines), and consider schools known for generous need-based aid. To maximize scholarships: apply broadly, write strong essays, look for local and niche scholarships with less competition, and negotiate your award letter with schools by comparing competing offers.
Can You Receive Both Grants and Scholarships?
Yes, and most financial aid packages include both. However, there's a concept called "stacking" limits — at many schools, institutional grants are reduced dollar-for-dollar when you win outside scholarships. Always check your college's policy on outside scholarships to understand how they interact with your aid package.
Frequently Asked Questions
Do you have to pay back grants or scholarships?
No — both grants and scholarships are free money that doesn't need to be repaid, as long as you meet the conditions of the award (such as maintaining a certain GPA or completing your degree program).
What is the Pell Grant and how do I qualify?
The Pell Grant is the federal government's largest grant program, providing up to $7,395/year (2024–25) to eligible undergraduate students based on financial need as determined by FAFSA. Students from lower-income families typically receive the maximum award.
Can winning a scholarship reduce my financial aid?
It can. Many colleges reduce their institutional grants when you win outside scholarships, a practice called aid displacement. Always ask your financial aid office how outside scholarships affect your total aid package.