Gift aid comes in the form of both grants and scholarships. Gift aid is money that, unlike student employment and student loans, does not need to be earned or repaid. Although the terms grant and scholarship are frequently used interchangeably, they have some key distinctions. Scholarships are typically based on merit, whereas grants are based on financial need.

What is a Grant?

Grants are sums of money given by one party (the grantmaker), typically a government agency, corporation, foundation, or trust, to another party (the grantee), typically (but not necessarily) a nonprofit organization, a business, an institution of higher learning, or an individual.

Grants are typically given out by colleges and universities, as well as by the federal and state governments. The largest award program is the Federal Pell Grant. Nearly half of all awards come from colleges and universities, over a quarter are federal Pell Grants, and the remaining percentage is evenly split between state grant programs and military student help.

Given the disparity between family contribution and the college’s cost of attendance (COA), a student must demonstrate financial need in order to qualify for a grant (EFC). The EFC is the only factor taken into account for some programs.

What is a Scholarship?

A scholarship is a cash award given to a student to support their study. Scholarships are given based on a variety of factors, typically reflecting the beliefs and goals of the award’s creator or donor.

Private scholarship providers, such as foundations, philanthropists, unions, businesses, professional membership organizations, fraternal groups, non-profit organizations, and religious institutions, are usually the ones who give out scholarships.

Scholarship candidates are chosen based on their merit. Scholarships are given to students who meet the academic requirements and who require financial aid to finish their courses on time. A select number of institutions offer full-tuition academic scholarships based on the student’s grade point average (GPA), results on the admissions test, and place in the class.

Some scholarships resemble grants in terms of their features. For instance, several programs require that students maintain a certain GPA in order to renew the need-based grant. Millions of students receive about $6 billion in private scholarships and fellowships each year. About one in eight college students receive a scholarship, with the average amount being around $4,000.

Why Apply for Grants and Scholarships?

Applying for grants and scholarships is a good idea because they can help students pay for college more affordably and lessen their debt and workload. You won’t need to borrow as much money for every dollar you win.

You can apply for grants or scholarships if you need financial assistance so you can continue your study rather than leaving college. Grants are given to people who cannot afford their education, whereas scholarships are offered to students who excel in academics or athletics. To improve research initiatives and other academic infrastructure, grants are given out.