When planning how to pay for education — whether it’s high school, college, graduate school, or specialized training — students and families often encounter the terms “grants” and “scholarships.” At first glance, these two types of financial aid may seem interchangeable, especially since both offer money that typically does not have to be repaid. However, while they share some similarities, there are distinct and important differences that can significantly affect how much aid you qualify for, how you apply, and what you need to do to maintain that support.
Understanding those differences — as well as how each type of aid works, who funds them, and how to maximize your chances of securing them — is essential to making college and higher education more affordable. This article breaks down everything you need to know.
Overview: What Are Grants and Scholarships?
What Is a Grant?
A grant is a type of financial aid awarded to students primarily based on financial need. Unlike a student loan, grant money typically does not need to be repaid — making it a highly valuable form of education funding. Grants are most commonly funded by federal and state governments, but colleges and private organizations may also offer them.
One of the most well-known examples in the U.S. is the Federal Pell Grant, which aims to help low- and moderate-income undergraduate students afford higher education costs. But many states and institutions offer additional grant programs targeted at specific groups or goals.
What Is a Scholarship?
A scholarship is also a form of financial aid that usually does not require repayment. However, scholarships are most often awarded based on a broader range of criteria — including academic merit, special talents, leadership, athletics, unique backgrounds, or even specific fields of study. Scholarships may be funded by private organizations, corporations, foundations, schools, non-profits, or individuals.
While some scholarships do consider financial need as part of their eligibility criteria, many are purely merit-based or focused on specific achievements or characteristics.
Key Differences Between Grants and Scholarships
At their core, both grants and scholarships are forms of “gift aid” — meaning they don’t need to be repaid. However, several important distinctions set them apart:
1. Eligibility Criteria
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Grants are mostly need-based. They are typically awarded to students who demonstrate financial need, which is often determined by data submitted through applications like the Free Application for Federal Student Aid (FAFSA).
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Scholarships are usually merit-based or criteria-based. They may be awarded for academic excellence, athletic talent, artistic ability, community service, leadership, or memberships in specific demographic groups. Some scholarships also include financial need as one of multiple qualifying factors.
In simpler terms: grants focus more on your financial situation, while scholarships can focus on accomplishment, talent, or identity, as well as need.
2. Sources of Funding
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Grants are most commonly funded by government sources — such as federal or state education departments — because they serve broader policy goals around access and affordability. Colleges and universities also administer institutional grant programs.
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Scholarships may come from a wide range of entities including schools, corporations, philanthropic foundations, community groups, religious organizations, or clubs. This variety leads to a diverse landscape of scholarship opportunities.
3. Purpose and Focus
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Grants are primarily designed to help students who may lack financial resources to pursue higher education. They help level the playing field by allocating resources based on demonstrated need.
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Scholarships often aim to reward excellence or accomplishment — recognizing students for academic success, leadership, specialized skills, or traits valued by the scholarship provider.
4. Application and Selection Process
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Grants generally require submission of the FAFSA, which automatically qualifies students for many federal and state grant programs, reducing the need for separate applications.
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Scholarships typically require individual applications, often involving essays, letters of recommendation, portfolios, or other documentation to demonstrate eligibility.
5. Amounts and Availability
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Grants may be limited in number and tied to specific financial aid budgets, meaning they can be competitive among need-qualified students.
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Scholarships are also competitive — especially the larger awards — but the sheer diversity of scholarship programs means there are often more individual opportunities to pursue.
Types of Grants
While most grants are financial need-based, they still vary in source, purpose, and eligibility. Here are some of the most common grant categories:
Federal Grants
These are funded by national governments and often include:
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Pell Grants: Awarded to undergraduate students based on financial need.
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Federal Supplemental Educational Opportunity Grants (FSEOG): For students with exceptional financial need, often awarded by college financial aid offices.
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TEACH Grants: For students who commit to teaching in high-need fields or areas.
State Grants
Many states operate their own grant programs tied to residency or enrollment at in-state colleges. Examples include income-based state grants and targeted grants for certain fields of study.
Institutional Grants
Some colleges offer grant programs directly through their own financial aid offices, often based on a combination of financial need and institutional priorities.
Types of Scholarships
Scholarships are incredibly diverse, reflecting the goals of the organizations that fund them. Below are common scholarship categories:
Merit Scholarships
These are awarded based on achievement, such as:
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Academic excellence
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High standardized test scores
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Outstanding leadership
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Special talents (e.g., music, arts, debate, innovation)
Need-Based Scholarships
Some scholarships specifically target students who demonstrate financial need, combining need and achievement criteria.
Demographic or Identity-Based Scholarships
These are designed to expand access to education among students from underrepresented or targeted groups, such as women in STEM, first-generation college students, or heritage-based awards.
Specialized and Field-Specific Scholarships
Certain scholarships are tied to specific fields of study (e.g., engineering, nursing, agriculture) or career goals, encouraging students to pursue critical or underserved professions.
Common Misconceptions
Misconception: Grants are always need-based and scholarships are always merit-based.
While this is generally true, the reality can be more nuanced. Some grants may have merit or purpose-based dimensions (e.g., research grants), and some scholarships weigh both financial need and merit.
Misconception: You can only receive one form of gift aid.
Students may receive both grants and scholarships as part of their financial aid package. In fact, combining gift aid types is often the key to reducing overall education costs.
Comparing Grants and Scholarships: Side-by-Side
How to Apply for Grants and Scholarships
Applying for Grants
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Complete the FAFSA: Many federal and state grants automatically consider FAFSA results.
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Meet Deadlines: File as early as possible, as some aid is awarded on a first-come, first-served basis.
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Check with Your School: Some colleges require additional documentation for institutional grants.
Applying for Scholarships
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Research Opportunities: Use scholarship search tools and community resources.
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Prepare Materials: Gather essays, transcripts, letters of recommendation, and test scores.
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Apply Widely: The more scholarships you apply for, the better your chances of winning awards.
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Track Deadlines: Scholarship deadlines often fall earlier than financial aid deadlines.
Tips for Maximizing Financial Aid
1. File FAFSA Early
Even if you think you may not qualify for need-based aid, filing the FAFSA is essential — many scholarships and state aid programs also use FAFSA data.
2. Start Early
Begin your scholarship search as early as freshman or sophomore year of high school to build a strong application portfolio.
3. Use Multiple Tools
Online scholarship databases, guidance counselors, community groups, and nonprofit organizations can expand your opportunities.
4. Maintain Strong Academic Standing
Even for need-based aid, maintaining good grades can help you qualify for more scholarships and institutional support.
5. Don’t Ignore Local Resources
Smaller local scholarships often have fewer applicants and better odds of winning.
Conclusion
Grants and scholarships are two of the most valuable tools available to students seeking financial support for education. While both provide gift aid that doesn’t need to be repaid, understanding the differences between them — in eligibility criteria, sources of funding, and application processes — can help you strategically pursue more money for school and less debt after graduation.
By filing the proper applications early, researching widely, and applying strategically, you can make the most of grants, scholarships, and other financial aid opportunities. Whether you’re a high school student, a college learner, or returning to education later in life, knowing how to navigate the financial aid landscape is essential — and it all starts with understanding the difference between grants and scholarships.
Grants & Scholarships Application Checklist
Use this checklist to stay organized, meet deadlines, and maximize your chances of receiving free money for education.
STEP 1: Get Financial Aid Ready
☐ Create an FSA ID (student + parent, if required)
☐ Gather financial documents (tax returns, W-2s, bank statements)
☐ Complete the FAFSA as early as possible
☐ Review your Student Aid Report (SAR) for errors
☐ Submit any required state financial aid applications
📌 Tip: Many grants and some scholarships rely on FAFSA data—even merit-based ones.
STEP 2: Identify Grant Opportunities
☐ Review federal grant eligibility (Pell, FSEOG, TEACH, etc.)
☐ Check your state’s higher education website for state grants
☐ Contact your college’s financial aid office about institutional grants
☐ Confirm residency, income, and enrollment requirements
☐ Note grant renewal criteria (GPA, credit hours, service obligations)
STEP 3: Build Your Scholarship List
☐ Search national scholarship databases
☐ Check scholarships offered by colleges you’re applying to
☐ Ask high school counselors or college advisors for local scholarships
☐ Explore employer, union, community, and nonprofit scholarships
☐ Look for scholarships tied to your major, background, or interests
📌 Tip: Smaller, local scholarships often have less competition.
STEP 4: Organize Deadlines & Requirements
☐ Create a master spreadsheet or tracker
☐ List scholarship/grant name and award amount
☐ Record deadlines (application + supporting documents)
☐ Note required essays, recommendations, or portfolios
☐ Set reminders 2–4 weeks before each deadline
STEP 5: Prepare Core Application Materials
☐ Official transcripts (high school or college)
☐ Standardized test scores (if required)
☐ Updated resume or activity list
☐ Personal statement (can be adapted for multiple applications)
☐ Portfolio or work samples (if applicable)
STEP 6: Write Strong Essays
☐ Carefully read each prompt
☐ Tailor essays to each scholarship’s mission
☐ Highlight achievements, leadership, and goals
☐ Explain financial need clearly (if required)
☐ Proofread for grammar, clarity, and tone
📌 Tip: Reuse essay frameworks—but always customize.
STEP 7: Request Recommendations Early
☐ Choose recommenders who know you well
☐ Ask at least 3–4 weeks in advance
☐ Provide resume, transcript, and essay drafts
☐ Share deadlines and submission instructions
☐ Send polite reminders before due dates
STEP 8: Submit Applications
☐ Double-check eligibility criteria
☐ Verify all documents are uploaded correctly
☐ Confirm essays match the correct application
☐ Submit before the deadline (early is better)
☐ Save confirmation emails or screenshots
STEP 9: Follow Up & Track Awards
☐ Monitor email and application portals
☐ Respond promptly to requests for additional info
☐ Accept awards by stated deadlines
☐ Notify your college’s financial aid office of external scholarships
☐ Update your tracker with results
STEP 10: Maintain Eligibility
☐ Meet GPA and enrollment requirements
☐ Complete required community service (if applicable)
☐ Reapply annually for renewable scholarships or grants
☐ Submit FAFSA every year
☐ Report major or enrollment changes if required
