Difference Between Scholarships and Grants

After you’ve done a lot of research on college financial aid options, two things become apparent: one, there’s confusion about the difference between scholarships and education grants, and two, there are countless websites offering fantastically easy access to “government grants.” These “government grant” sites are usually loud and flashy with screaming headlines in large type about the millions of dollars the government must give away every year — and most are scams. There are many legitimate scholarship databases out there, but there are far more shady grant advertisements. Getting familiar with both kinds of websites, and with the differences between scholarships and education grants, can help you find the financial aid information you need more quickly.

Government Grants and Foundation Grants

A grant is funding that does not need to be repaid. It is a gift of money awarded to recipients who demonstrate with their application that they are in financial need or that they will meet the non-financial conditions placed on getting the money.

Government grants, the most widely available and most familiar type of grant, are available to qualifying citizens or organizations for a broad range of purposes, including community services, starting a small business, employment and training programs, legal services, humanities and arts programs, environment initiatives, and research and development in fields from agriculture to zoology.

Foundation grants — grants offered by private nonprofit foundations — are similar to government grants in that do not have to be repaid. But foundation grants usually have narrow, targeted guidelines for and restrictions on how the grant money can be spent, and a comprehensive application process to make sure the grant money goes to recipients who will make the best use of it.

Generally, neither government grants nor foundation grants are available to individuals for such personal services as paying your bills, buying a personal car, paying your college tuition, or clearing your credit card debt. There are numerous federal and state “safety net,” medical support, and other financial assistance programs available to help citizens and families in financial need.

Foundation grants and government grants, including federal and state grants, are intended for development or support of projects that will benefit the community at large, whether it is medical research, a local arts center, or a regional emergency preparedness program. The exception is a small business grant for individuals, and even in this case, you will probably need to demonstrate that your small business will provide a necessary service or benefit to the community. (Otherwise, you will probably need to obtain a small business loan.)

Contrary to what all the flashy “get your government grant right here” sites tell you, the only place you can apply for federal government grants is at the federal government grant site, www.grants.gov.

Education Grants

The term “education grant” can be a little confusing, because it can be used to refer a couple of different types of grants for education.

Education Grants for States and Communities Developing New Education Programs

One type of education grant is a government grant or foundation grant awarded to communities for the development of higher education or career training programs. A community may be national, a state, a county, or even a township. The best-publicized education grants being awarded right now are going to U.S. states, who are applying for and receiving several-million-dollar grants from the American Recovery and Reinvestment Act ($787 billion “Stimulus Bill”). States are using these ARRA education grants to develop new college and career training programs, particularly to help workers who have lost their jobs in the current recession to transition to new industries and employment.

Examples of government and foundation education grants include $7 million of ARRA funds offered to the auto industry states for displaced worker education and $2 million in grants the Alfred P. Sloan Foundation is offering regional public universities to develop online education programs for local students.

Education grants of this type are not available to individual students looking for financial aid for college. This is one difference between scholarships and certain education grants. Scholarships are intended for individual students, but institutional education grants are awarded to organizations that develop education programs for students. As a student, you cannot apply for this type of education grant at any grants website, even the federal grants.gov site.

Education Grants for Individual Students

The second type of education grant is a government grant awarded to individual students for the sole purpose of paying for college or career training. There are only a few of these education grants at the federal level, although individual states may also offer a limited number of student-recipient education grants. Education grants for individual students are almost always awarded according to financial need.

Federal education grants for students include the well-known Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG), the Teacher Education Assistance for College and Higher Education (TEACH) Grant, the Academic Competitiveness Grant (ACG), and the National Science & Mathematics Access to Retain Talent Grant (National SMART Grant). Eligibility for the Pell Grant, FSEOG, ACG, and SMART Grant, and the amount awarded per student, is based on financial need. Eligibility for the TEACH Grant is not need-based, but requires an agreement to teach in high-need schools for a certain period of time after graduation. Eligibility for all federal and state education grants for individual students requires submitting a Free Application for Federal Student Aid (FAFSA) every year of school.

Scholarships: Individual Student Education Grants By Another Name

William Shakespeare famously said, “A rose by any other name would smell as sweet.” That may be true of a rose, but in higher education, a scholarship by any other name is just plain confusing. Nevertheless, the U.S. Department of Education is not likely to change the names of its student education grants to the Pell, FSEO, TEACH, Academic Competitiveness, and SMART Scholarships. So, it is up to us to remember that some education grants for individual students may be called grants, but the vast majority of these college grants are known as scholarships.

So Is There Any Difference Between Scholarships and Grants?

Well, in this use of the term “education grant,” there is often no difference between scholarships and student grants when it comes to the purpose of the money: both are intended to pay college costs. But the reasons for awarding the two types of aid can be different, and this may explain why both terms are still used.

Federal education grants for individual students are provided according to financial need, with the goal of helping more students get to college who might not otherwise have the opportunity. A Pell Grant is “need-based” financial aid. Scholarships, however, are often awarded to students based on their academic achievement, because achievement implies future success. Many scholarships are “merit-based” financial aid, and can be competitive.

Today, with the price of college so high, the separation between need-based and merit-based financial aid is not so clear-cut. The Department of Education still provides need-based education grants, but thousands of foundations, organizations, corporations, trade associations, and schools offer need-based scholarships, merit-based scholarships, and a broad array of scholarships that combine financial need with merit award. In addition to the familiar scholarships for athletes, there are scholarships for musicians, for minorities, for students in specific fields of study, for first-generation college students, for adult learners returning to school after years in the workforce, for single mothers, for students willing to go into challenging or high-demand professions, for workers laid off from businesses that have closed.

Scholarships that can cover all 4 years of college may no longer exist, but many students piece together the money they need by applying for several different scholarships on top of their federal education grants. As long as you know which education grants are for meant for states and communities, and which are meant for individual students, the difference between scholarships and grants should not matter — all you need to confirm is that you meet all the eligibility criteria. As always, read all the fine print.

One comment to “Difference Between Scholarships and Grants”

  1. Thanks, this is very helpful. The clarification is most appreciated to decipher these two descriptions of financial aid.

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