Understanding the Difference between Grants and Scholarships

It is easy to get confused about grants and scholarships. People often use the terms interchangeably, and both mean money that doesn’t have to be repaid. There are slight and subtle differences, however, and it pays to know the difference.

The federal government, for instance, gives out grant monies for a huge variety of reasons. Many go to fund scientific research and studies, such as the infamous studies on why dogs bark or birds sing. Federal grants are awarded in a number of categories, including agriculture, business and commerce, education, community development, energy, environment, food and nutrition, humanities or cultural affairs, health, law and justice, legal services and natural resources. Grants are given for studies in these categories, for development of environmentally sensitive new products, training for people who have lost their jobs, cultural programs, disaster prevention, transportation and much more.

The category we’re interested in, however, is grants for education, specifically individual education grants. The government also awards education grants to communities and regional governments for educational development, usually for new college programs based at community colleges. In a recent article, we covered the five basic federal grants awarded through the FAFSA application: Pell grant, SEOG, TEACH, ACG and national SMART grant. These federal grants are predominantly for financially needy students, although a few are based on academic achievement or the course of academic study.

One difference between grants and scholarships is that grants for individual education are need rather than merit based. Both, however, pertain to money slated to be used for college education.

Another difference between grants and scholarships is the requirements and obligations that come with them. With grants, once you have demonstrated and documented your qualification for the grant through your FAFSA or other application, you will receive the grant and any other grants for which you have qualified. With scholarships, the requirements can be far more stringent and the application process far more competitive. Scholarships may require an application, essay, answering questions and an interview with a scholarship committee. They may require a certain GPA, high test scores and class rank. Once you’ve been awarded the scholarship, you might have to keep up your GPA in order to continue receiving the money. Scholarships tend to be awarded competitively, to those with the best academic or athletic record of achievement, while grants are given to all students who qualify based on their family’s earnings and assets.

A third difference is that scholarships are always given for educational reasons, while grants may be awarded for any number of reasons, some of them educational. Grants and scholarships are very closely related, which is why the words can be used interchangeably. All scholarships are grants, while not all grants are scholarships. While the difference between the two might still be somewhat confusing, just remember this. If you need money to help pay for your college education, then focus your searches on scholarships. If you need money to achieve another purpose that will not only benefit you but your community as well, such as a small business, then you should focus your search on grants, whether they be from the federal or state governments, foundations, organizations, corporation or another party.

Education grants for individuals are awarded by the federal and state governments, however, usually based on financial need. Some scholarships may be awarded based on financial need, but most often are given for academic, athletic or other achievement such as community service, musical talent, performing arts, engineering skill, writing talent or pursuing certain academic studies or careers. Scholarships may also be given for relatively oddball reasons such as left-handedness, duck calling ability or best prom fashions created from duck tape. Scholarships may be given for certain characteristics, ethnic background, heritage, minority status, gender or height.

To recap, grants and scholarships, while greatly similar, exhibit subtle differences. Both can bring in money for college education that doesn’t have to be repaid, which make these forms of financial aid both highly popular and competitive, at least for scholarships. Individual education grants from the federal government require the FAFSA to be filed each year you are in school. Scholarships may be awarded for all four years of college or only one year. A few colleges award a full ride scholarship that encompasses tuition, room and board, fees, textbooks and personal expenses. See AcademicInfo’s article on full ride scholarships for more information. If you’re a student heading off to college, you should apply for every grant and scholarship you may be even remotely qualified to receive. You will be surprised at the amount of money you could bring to bear on the cost of your education.

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