Grant vs scholarship: Breaking down the differences
Share via
Financial aid can be a lifeline for many families navigating the cost of higher education. Grants and scholarships are two popular forms of "free money" that don’t need to be repaid, but they’re not the same. Understanding the difference can help you and your child make informed choices when planning for college expenses.
What is a grant?
Grants are typically awarded based on financial need and often funded by federal or state governments, colleges, or nonprofit organizations. Grants help make education more financially accessible to students in need.
Examples of common grants
Federal Pell Grant: Designed for undergraduates from low-income families.
Federal Supplemental Educational Opportunity Grant (FSEOG): For students with exceptional financial need.
TEACH Grant: For students pursuing a teaching career in high-need fields. Recipients must teach in such areas for a set period; otherwise, the grant converts to a loan.
State-specific tuition grants: Many states, such as New York's Tuition Assistance Program (TAP), offer grants to in-state residents attending eligible colleges.
Institutional grants: Colleges and universities often provide their own need-based grants to students, typically funded by the school’s endowment or donations.
Pros of grants
Do not need to be repaid
Provide vital resources for low-income families
Applications are straightforward, typically requiring the FAFSA
Be a financially smart family!
Cons of grants
Limited funding; competition is high
Typically don’t cover all education expenses
May have restrictions on how funds are used
Filing the FAFSA is a great starting point for securing grants and exploring other financial aid options.
What is a scholarship?
Scholarships are usually merit-based, rewarding students for their accomplishments or qualifications. Qualifications might include academic performance, athletic ability, artistic talent, leadership experience, or a student's unique background.
Scholarships come from various sources, including colleges, nonprofits, private organizations, and community groups.
Examples of scholarships
Academic scholarships for maintaining high GPAs.
Athletic scholarships for excelling in sports.
Ethnicity-based scholarships, like those for specific minority groups.
Creative scholarships, such as those awarded for writing the best essay.
STEM scholarships, awarded to science, technology, engineering, or mathematics students, may be sponsored by companies or organizations promoting STEM careers.
Local community organizations, such as Rotary Clubs, Lions Clubs, or local businesses, often sponsor scholarships for students in their area. These scholarships may have less competition than national awards and can provide significant support.
Pros of scholarships
No repayment is required if conditions are met (e.g., maintaining a specific GPA)
Many options and funding sources to explore
Winning scholarships can enhance résumés and strengthen college applications by showcasing achievements.
Cons of scholarships
Competitive and may require significant time to apply
Some require ongoing eligibility maintenance (e.g., GPA thresholds)
Research and application processes can feel overwhelming
Unlike grants, which focus on need, scholarships open up opportunities for students from all walks of life.
Key differences between grants and scholarships
While both grants and scholarships provide "gift aid," here are the major differences to keep in mind when exploring these options.
Criteria | Grants | Scholarships | |
|---|---|---|---|
Eligibility | Based on financial need | Based on merit or achievements | |
Funding sources | Typically government or schools | Schools, private organizations, community groups | |
Application process | Requires FAFSA | Often requires separate applications, essays, or proof of achievement | |
Restrictions | Usually limited to tuition, fees, and required expenses | Scholarships may cover tuition, living costs, textbooks, and more, though some are limited to specific majors or schools |
Understanding these differences gives you a clearer sense of which aid(s) may best fit your family’s needs.
Can students apply for both?
Yes! Students can apply for both grants and scholarships, as they are not mutually exclusive. Leveraging multiple sources of financial aid can significantly reduce the overall cost of education.
For example, a student might qualify for a need-based Pell Grant and win a scholarship for their athletic abilities. Together, these funds can ease the financial burden for families.
Tips to maximize financial aid opportunities
Start early: Research and apply for grants and scholarships as soon as possible—some applications open as early as junior year of high school.
Use free search tools: Websites like Fastweb and Bold.org help match students with scholarships that fit their profiles.
Fill out the FAFSA: This is the gateway to federal and state grants and many scholarships.
Keep an eye on deadlines: Late applications often mean missed opportunities.
Involve high school counselors: They can help identify relevant scholarships and grants for your child.
Reach out to college financial aid offices: They may be able to provide information for lesser-known grants or scholarships unique to specific institutions.
Making financial literacy part of the process
Teaching your child about financial aid isn’t just about securing funds for college—it’s also an opportunity to build lifelong money skills. One of those skills may be saving, as implementing a savings plan for college can help alleviate the financial burden of higher education.
Teach money skills for life. Greenlight helps families teach critical financial lessons from their first paycheck to college savings. Try Greenlight today — one month, risk-free.†
This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.
†Valid for new customers only. Subject to identity verification and minimum load requirements. Your first monthly fee will be billed to your parent wallet seven days after successful registration. To receive a refund of your first monthly fee, you must request to close your account on or before the day immediately preceding your first Monthly Billing Date. See the ‘Account’ tab of Settings by tapping the gear icon on the Greenlight app home page to confirm when your risk-free trial ends. See Terms for details.
Share via
Hey, smart parents 👋
Teach money lessons at home with Greenlight’s Smart Parent newsletter. Money tips, insights, and fun family trivia — delivered every month.
