Grants and scholarships are two forms of financial aid for college students that are not required to be paid back. Although they can both be used to help pay for college tuition and other education-related expenses, there are some key differences between them. You may end up applying for several grants and scholarships, as there is no limit to how many you can receive, so it’s worth understanding both options.
Below we discuss some differences between these two forms of financial aid and other considerations for grants and scholarships:
Understanding Grants
You may be eligible to apply for higher education grants from your state as well as the federal government. The Federal Pell Grant is the largest grant program in the United States. Financial need is the main criteria for grant eligibility. The two factors that determine financial need include:
- Expected Family Contribution (EFC)
- Cost of Attendance (COA) at the college you have chosen
You will need to complete and file the Free Application for Federal Student Aid (FAFSA) for any type of financial assistance from the federal government. You can submit the FAFSA any time after October 1 for the next school year.
If you plan to apply for state aid, check with your high school guidance counselor or complete an online search for applications, deadlines, and instructions. Both Massachusetts and Rhode Island have state funded grant programs for residents with different requirements for eligibility. State grant programs typically base the amount of funds you can receive off of the information you submit in your Federal Student Aid (FAFSA) application as well.
Colleges and universities also issue their own grants to students who meet qualification guidelines. It is recommended that you contact the college or university’s financial aid department before applying for assistance to determine if you might qualify.
Regardless of which type of grant you apply for, if you receive one it will be distributed directly to the college or university you will attend. When it comes time to renew a grant, you may need to prove that you have maintained a minimum GPA to continue receiving federal, state, or school funds.
Understanding Scholarships
While grants are entirely need-based, most individuals and organizations that award scholarships do so based on the student’s merit. For example, you could receive a scholarship from an art school based on the portfolio of artwork you submitted. Likewise, you could receive a college scholarship for having the highest GPA (grade point average) in your high school class.
However, some scholarships are awarded based on factors other than merit such as being the first person in your immediate family to attend college or having a parent in the military. Unlike grants that are issued by federal and state governments, scholarships typically come from private parties. The following are examples of parties that may offer student scholarships:
- Employers
- Foundations
- Non-profit organizations
- Private philanthropists
- Professional membership organizations
- Religious institutions
- Colleges and universities
- Unions
The people and organizations that offer scholarships can set their own eligibility requirements. Many require you to have and maintain a certain GPA. Some colleges and universities give out student scholarships as well. In 2020, 58% of college students received financial aid in the form of a scholarship. There are many resources available online to help find scholarships to apply for, including searchable databases. Checking local resources for scholarships can be beneficial as well. Your high school guidance counselor, your employer, your parents’ employers, and church, community, and civic groups are all great places to start your scholarship search.
A scholarship awarded by your college or university will typically be applied directly to your tuition bills. Private scholarships may be sent directly to your college or university, or they may be distributed to you in the form of a check or direct deposit so you can use them for tuition-related expenses.
How Can You Spend Leftover Grant and Scholarship Money?
If you receive a grant or scholarship that amounts to more than the total cost of your college attendance, you may receive the leftover funds in the form of a refund. You can typically spend that leftover money on anything that helps you attend college such as books, computers, or even room and board.
While scholarships and grants are generally tax-free as long as they’re applied to qualified expenses at eligible schools, it’s important to note that you may be required to pay taxes on any leftover amounts that are refunded to you. Because of this, it’s always a good idea to check in with a tax professional or financial advisor to better understand any potential tax implications regarding financial aid.
When paying for college, every little bit can help. By researching the various scholarships and grants out there, and by applying for those that you qualify for, a college education could become a lot more affordable for you. Best of luck in your pursuit of higher education!