How to Understand the Difference Between Scholarships and Grants

When it comes to financing your education, scholarships and grants are among the most desirable types of financial aid as they don’t need to be repaid. However, understanding the difference between scholarships and grants can be confusing. This blog post aims to clarify the distinctions between these two forms of financial aid, to help you understand which one to apply for at the appropriate time.

What are Scholarships?

Scholarships are financial aid awards designed to help students pay for an undergraduate degree. They are merit-based, meaning they are given to students based on their academic achievements, extracurricular activities, field of study, and more. Scholarships can be offered by various entities, including colleges, private organizations, and government agencies.

Scholarships are often competitive, with many applicants vying for a limited number of awards. They can cover a portion of tuition fees or the entire cost of tuition, depending on the scholarship. Some scholarships may also cover other expenses, such as books, housing, and travel.

While scholarships are typically merit-based, the definition of “merit” can vary widely. For some scholarships, merit may be defined by academic achievement, such as a high GPA or outstanding standardized test scores. For others, merit may be defined by talents or interests, such as athletic ability, artistic talent, or commitment to community service.

Types of Scholarships

There are several types of scholarships available, including:

  1. Merit-based Scholarships: These are awarded based on academic, artistic, or athletic talent.
  2. Need-based Scholarships: These are accessible to applicants who have demonstrated financial need.
  3. Student Specific Scholarships: These are granted to students based on personal characteristics such as religion, ethnicity, or being the first in their family to attend college.
  4. Career Specific Scholarships: These are awarded to students pursuing a specific career field.

Merit-based scholarships are perhaps the most well-known type of scholarship. These scholarships reward students for their academic achievements, athletic abilities, artistic talents, or other unique skills. They are often highly competitive and require applicants to demonstrate exceptional ability in their chosen field.

Need-based scholarships, on the other hand, are awarded based on financial need. These scholarships aim to make education more accessible to students who may not be able to afford the cost of tuition and other related expenses. They are typically awarded based on the information provided in the Free Application for Federal Student Aid (FAFSA).Student-specific and career-specific scholarships are more specialized types of scholarships. Student-specific scholarships are awarded to students who meet certain personal criteria, such as belonging to a certain ethnicity, religion, or other demographic group. Career-specific scholarships are awarded to students who plan to pursue a career in a specific field, such as nursing, teaching, or engineering.

What are Grants?

Grants, like scholarships, are forms of free financial aid that do not need to be repaid. However, unlike scholarships, grants are typically need-based and are given to students who demonstrate financial need. They can come from various sources, including the federal government, state governments, and private organizations.

Grants are often considered the most desirable form of financial aid because they provide free money for college that doesn’t need to be repaid. They are typically awarded based on financial need, making them an important resource for low-income students. However, some grants may also consider academic achievement or other factors.

Federal grants, such as the Pell Grant, are perhaps the most well-known type of grant. These grants are funded by the federal government and are awarded to students based on financial need. The amount awarded can vary each year and depends on factors such as the cost of attendance, financial need, and enrollment status.

Types of Grants

Grants are usually not categorized, but they can be specific to certain demographics, financial situations, or unique life circumstances. For example, some private-sector grants are specific to certain ethnicities, religions, or unique life circumstances, such as being in the foster system.

While grants are typically need-based, there are some exceptions. For example, the Federal Supplemental Educational Opportunity Grant (FSEOG) is a need-based grant that is awarded to students with the greatest financial need. However, the Teacher Education Assistance for College and Higher Education (TEACH) Grant is a merit-based grant that is awarded to students who agree to teach in a high-need field or in a low-income area.

In addition to federal grants, there are also state grants, institutional grants, and private grants. State grants are funded by state governments and are typically awarded to residents of that state. Institutional grants are funded by colleges or universities and are awarded to students based on financial need, academic merit, or both. Private grants are funded by private organizations or individuals and can have a wide range of eligibility criteria.

Scholarships vs Grants: Key Differences

The primary difference between scholarships and grants lies in the criteria for receiving them. Scholarships are typically merit-based and awarded based on a student’s achievements, talents, or interests. On the other hand, grants are usually need-based and given to students who demonstrate financial need.

While both scholarships and grants provide financial aid that doesn’t need to be repaid, they are awarded based on different criteria. Scholarships are typically awarded based on merit, which can include academic achievement, athletic ability, artistic talent, or other unique skills or interests. Grants, on the other hand, are typically awarded based on financial need.

Another key difference between scholarships and grants is the application process. Applying for scholarships often requires more effort, as students may need to write essays, gather recommendation letters, and meet specific deadlines. In contrast, applying for grants usually involves demonstrating financial need, often through the Free Application for Federal Student Aid (FAFSA).

How to Apply for Scholarships and Grants

Applying for scholarships and grants is a multi-step process that requires organization, attention to detail, and often, a demonstration of either merit or financial need. Scholarships are typically merit-based and may require students to showcase their academic achievements, extracurricular involvement, or specific talents. To apply for scholarships, students should start by researching opportunities through school guidance offices, online scholarship databases, and community organizations. It’s important to tailor each application to the scholarship’s criteria, which may include writing essays, obtaining letters of recommendation, and submitting portfolios or audition tapes.

Grants, on the other hand, are usually need-based and require students to demonstrate financial need. The most common way to apply for grants is by completing the Free Application for Federal Student Aid (FAFSA), which is used to determine eligibility for federal, state, and some institutional grants. Students should file the FAFSA as early as possible, as some grants are awarded on a first-come, first-served basis. Additionally, students should explore specific grant programs offered by their state or potential colleges, which may have separate application processes.

When applying for either type of financial aid, it’s crucial to meet all deadlines and provide complete and accurate information. Students should also follow up on their applications to ensure that all materials have been received and to check on the status of their applications. By applying for multiple scholarships and grants, students can increase their chances of securing the financial aid they need to support their educational goals.

Maximizing Your Financial Aid Opportunities

To maximize financial aid opportunities, students should employ a variety of strategies. Filing the FAFSA early is one of the most effective ways to increase the chances of receiving aid, as some funds are limited and distributed on a first-come, first-served basis. Students should also minimize their taxable income and reduce reportable assets to increase their eligibility for need-based aid. This can be done by paying down debt and strategically saving and spending.

Applying for private scholarships is another way to supplement financial aid packages. Students should use free resources like Fastweb to search for scholarships and should also pursue college-controlled merit scholarships. Additionally, having multiple family members in college at the same time can affect the distribution of the parent contribution, potentially increasing aid eligibility.

Lastly, students should avoid consumer debt, as it can negatively impact financial aid eligibility. By understanding the financial aid system and employing these strategies, students can enhance their chances of receiving the maximum amount of aid for which they qualify.

Beyond Scholarships and Grants: Other Financial Aid Options

While scholarships and grants are invaluable resources for funding education, they are not the only options available. Work-study programs offer students the opportunity to work part-time while studying, providing a way to earn money and gain work experience. Federal student loans, although they must be repaid with interest, can also be a part of a student’s financial aid package and often offer lower interest rates and more flexible repayment options than private loans.

Aid for military families and aid for international study are specialized forms of financial aid that cater to specific groups of students. Military families may have access to scholarships and grants specifically designed for them, and students studying abroad may be eligible for programs that support international education.

Tax benefits for education, such as deductions and credits, can also help offset the cost of college. These benefits can reduce the amount of tax owed and may increase the refund, providing additional financial support for students and families.

By exploring all forms of financial aid, including work-study, loans, specialized aid programs, and tax benefits, students can create a comprehensive plan to fund their education. It’s important to research each option thoroughly and understand the terms and conditions associated with them to make informed decisions about financing college education.


In conclusion, while both scholarships and grants provide free financial aid for students, they differ in their eligibility criteria and application processes. Understanding these differences can help students maximize their opportunities for receiving financial aid and reduce the financial burden of higher education. Remember, you can apply for both scholarships and grants, so explore all your options and apply for as many as possible to increase your chances of securing financial aid.

Understanding the difference between scholarships and grants is crucial for students seeking financial aid for college. While both offer free money for college, they have different eligibility criteria and application processes. By understanding these differences, students can better navigate the financial aid process and maximize their opportunities for receiving aid.

Finally, it’s important to remember that scholarships and grants are just two forms of financial aid. There are also loans and work-study programs available. While loans need to be repaid, work-study programs provide part-time jobs for students to earn money to help pay for college. Therefore, when seeking financial aid, it’s important to explore all your options and choose the ones that best fit your needs and circumstances. stands as a specialized blog concentrating on education, committed to delivering reliable Ghana Education News. We offer the latest developments concerning the Ghana Education Service, WASSCE, and BECE exams. Our coverage includes…

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