Loans Student Loans Financial Aid Comparison Guide: College Grants vs. Scholarships By Elyssa Kirkham Elyssa Kirkham Twitter Elyssa Kirkham is an expert on student loans and student loan issues. A personal finance journalist for nearly a decade, she covers consumer credit in addition to her specialization in education debt and financing. She holds a B.A. from Brigham Young University, Idaho. learn about our editorial policies Updated on September 30, 2022 Reviewed by Marguerita Cheng Fact checked by Lars Peterson In This Article View All In This Article Need vs. Merit How To Find Grants How to Find Scholarships The Bottom Line Frequently Asked Questions (FAQs) Photo: Kentaroo Tryman / Getty Images For college students and their families, the big financial question is how to pay for college. Grants and scholarships may be part of the answer, but what exactly is the difference between them? Both grants and scholarships provide free money, sometimes known as “gift aid.” The funding helps students cover educational costs with no expectation or requirement that it will be paid back. Because of this commonality, the words "grant" and "scholarship" are sometimes used interchangeably. There are, in fact, some key differences. Here’s a comparison guide to help you navigate the potential resources. Key Takeaways Scholarships and grants are sometimes known as "gift aid," since they don't have to be repaid (unlike student loans, which do have to be repaid).One difference between grants and scholarships is that grants are usually need based and scholarships are often merit based.There are many, many scholarships available and searching for the ones you qualify for can be daunting. Need vs. Merit Most grant awards are tied to a student’s financial need. Students are often evaluated on the basis of whether they can afford to pay for college, given their family income, savings, and other assets. Many grants have additional requirements to qualify, but the demonstrated need is usually what sets grants apart from scholarships. Scholarships, on the other hand, are more often awarded to students based on merit. They’re reserved for students with high achievement in academics, sports, leadership, or other activities. Scholarship programs might also consider financial need or other criteria, including a student’s ethnicity or state residency. The criteria for grants and scholarships aren’t black and white, so consider applying for them even if you think you might not qualify. Many scholarships look at financial need alongside other criteria, and some grants aren’t need-based, such as those awarded for a parent’s military service or for a student pursuing a teaching career. Note Students are evaluated for financial aid as part of the enrollment process, so some grants and even certain scholarships may automatically be included in your college’s financial aid offer letter, should you be eligible. Just make sure to complete a Free Application for Federal Student Aid (FAFSA) and request that it be shared with all colleges you’re considering. How To Find Grants A grant award can make a huge difference to students in figuring out how to pay for college. Many grants are offered through government programs, such as federal Pell Grants or individual state grants reserved for residents of those states. Colleges often have their own grant programs as well. Federal Grants Here are some of the common federally funded grants: Federal Pell Grants are the most common grants for undergraduate students, awarding up to $6,895 for the 2022-2023 school year based on financial need.Federal Supplemental Educational Opportunity Grants (FSEOG) award $100 to $4,000 per year to undergraduate students with exceptional financial need. College financial aid offices administer these, and not all schools participate in the program.Teacher Education Assistance for College and Higher Education (TEACH) Grants provide up to $4,000 per year to students seeking an education-related degree. These grants have very specific requirements, and the student must agree to work in a high-need field and low-income area after graduation. You do not have to demonstrate financial need.Iraq and Afghanistan Service Grants are extended to students who are the children or dependents of a military member who died serving in Iraq or Afghanistan. Students can only receive them if they aren’t eligible for Pell Grants. The maximum award is $6,895 for the 2022-2023 school year. The actual amount that an individual student may receive depends on a number of factors. State Grants State grant programs vary widely from state to state, both in how much assistance is provided and how they are run and administered. To find these grants, start with your state’s department of education or higher education agency websites. (Education departments and agencies for each state are listed here.) Also see this guide to state financial aid programs from the National Association of Student Financial Aid Administrators. Note While many grants are offered to resident students attending college in-state, not all have those restrictions. If you’re crossing state lines to attend college, make sure to check for programs from both your home state and the state where your school is located. College Grants While you may assume that your university’s financial aid office will automatically consider you for college-funded grants when putting together your offer letter, don’t take that for granted. Check with your financial aid administrator, college or major advisor, or student organization faculty to see whether there are other programs for which you might qualify. How To Find Scholarships You don’t have to be a valedictorian or star athlete to find scholarships. Among the thousands of scholarship programs, many are designed to support students with a wide range of backgrounds, achievements, and abilities. Many scholarships are funded by nonprofit organizations or foundations, private organizations, companies, and individuals. Some scholarships are granted to students of a certain religion, gender, ethnicity, or nationality. Others are aimed at supporting students who are pursuing specific career paths or fields of study. To find them, search online as well as within your own community. CareerOneStop, a resource from the Department of Labor, has a scholarship finder that can connect you with thousands of financial aid opportunities. Also check reputable online scholarship sites such as Cappex, Fastweb, and Scholarships.com. Closer to home, seek out information about scholarships from your high school or college counselor or your local library’s reference section. Check with any organization you have a connection with, such as your employer (or a parent's employer), your church or faith community, or local businesses. Just like with grant opportunities, check with your college. Some scholarships choose recipients through staff nominations rather than applications. The Bottom Line You are in the best position to know what distinguishes you as you hunt down grants and scholarships. Dedicate the time to finding and taking advantage of those opportunities, and keep in mind that not all forms of financial aid are alike. If you are offered scholarships or grants, make sure to exhaust those and any other gift aid first before considering student loans. Frequently Asked Questions (FAQs) Which is better: scholarships or grants? Scholarships and grants are both great sources of money to pay for college, primarily because they don't have to be repaid, unlike student loans. Grants can be more competitive, since there are fewer than them. Researching scholarships can be a big task, since there are so many to choose from. How do I find grants? A good place to start looking for grants is the federal government's student grant programs (there are four primary ones). After that, check with your state's education or financial aid department and next visit your college or university's financial aid office. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Student Aid. "Federal Grants Are Money To Help Pay for College or Career School." Federal Student Aid. "Federal Pell Grants." Federal Student Aid. "FSEOG (Grants)" Federal Student Aid. "TEACH Grants." Federal Student Aid. "Iraq and Afghanistan Service Grants." Drexel University School of Education. "Grants, Scholarships & Loans: What's the Difference?"