What Is the Difference Between a Grant and a Scholarship?

difference between grant scholarship

As the workforce becomes more competitive, an education is more and more necessary—but it’s coming at a steeper price. Over the past 30 years, college costs have increased faster than the rate of inflation; all told, the cost of tuition and fees has gone up a whopping 1,120%.

According to CourseSmart, in the 1972-1973 school year public tuition and fees averaged $2,225, while private tuition cost $10,378. In the 2012-2013 school year, those numbers have skyrocketed–$8,655 for public school and $29,056 for private school. And in the 2010-2011 school year, students spent more than $1,100 on textbooks.

With America’s student loan debt topping $1 trillion—an alarming milestone reached in 2011—it’s clear that many of us are struggling with how to pay for our education.

Bob Giannino and Allie Negron

College Affordability Featuring Bob Giannino and Allie Negron of uAspire

Learn about college expenses and figuring out how to pay for it with this episode of the YesCollege Podcast. Joining Scott to discuss this are two experts from uAspire, a non-profit organization that works to help all young people reach their higher education goals. Bob Giannino serves as uAspire’s CEO, while Allie Negron is a College Affordability Advisor.

What You’ll Learn in This Episode:

  • What the different financial “buckets” are when it comes to paying for college.
  • What key facts students (and families) need to know about filling out the FAFSA.
  • Which mistakes and pitfalls to avoid when applying for aid or figuring out how to pay for college.
  • Bob and Allie’s best advice and insight for college affordability.


Financial assistance in the form of grants and scholarships may be the answer for many. Unlike loans, which must be paid back and may accrue interest or fees in the meantime, both grants and scholarships are free money—that is, they don’t have to be paid back. In very general terms, scholarships tend to be awarded by colleges, foundations, community organizations, labor unions, houses of worship, and sometimes federal and local governments. Grants can also come from a variety of sources, including colleges or private sources, but most often they are funded by the federal or state government. So what’s the difference?

What are scholarships?

A scholarship is financial aid awarded to further a student’s education. Hundreds of private and public organizations offer scholarships, and the criteria varies. Some scholarships are paid straight to the recipient, while others are issued to the school the student attends as a direct payment toward tuition and/or fees. The most common types are classified as:

  • Merit-based scholarships are awarded to students who excel in a particular field or ability. The most common merit-based scholarships are awarded by universities to students with good test scores, report cards, or other academic or extracurricular achievements, such as community service or a talent for the cello. These scholarships are usually given with the expectation that the student will continue to excel in that field or ability.
  • Need-based scholarships are awarded based on the student’s financial need. Eligibility for these awards is determined by the student’s and his or her family’s financial record; the expected family contribution (EFC) toward the student’s education is weighed against the cost of attendance at a particular school. The EFC is calculated based on a specific formula that considers family income, assets, and benefits, as well as your family’s size and the number of family members attending college that same year. All federal awards and some private awards require applicants to fill out a Free Application for Federal Student Aid (FAFSA) to qualify.
  • Career-specific scholarships are awarded based on the student’s area of study and career goals. These scholarships are more commonly found in high-need fields, such as education and nursing.
  • Student-specific scholarships are awarded based on a variety of factors, such as gender, religion, ethnicity, disability, veteran status, and so forth. Often these scholarship awardees are judged not only on their fit into the given category but also their academic record, an application essay, or other factors.
  • College-specific scholarships vary by school and are awarded based on academic or personal achievements. These scholarships don’t result in money being sent to the student; instead, the student may receive a reduced rate of tuition or even a “full ride,” meaning they don’t have to pay any tuition at all. Varsity athletes, particularly in headlining sports like football and basketball, are often awarded college-specific scholarships to entice them to attend a particular school.

Scholarships may or may not have strings attached, otherwise known as a “bond” requirement that requires the recipient to work for a particular employer, go into a particular career field, and so forth.

What are grants?

Scholarships and Grants

In contrast, grants are almost always given to fund a specific project or defined goal, and they usually carry a bond requirement. Grants may pay for tuition, but they may also pay for a specific research project, arts endeavor, or a wide range of other activities.

Stepping back for a moment, the term “grant” has a much broader scope. Grants are awarded to individuals to pay for their education, but they may also be awarded to first-time homebuyers, business owners, nonprofit entities, and educational institutions. The U.S. federal government offers tens of thousands of grants, totaling billions of dollars each year, for projects ranging from research to construction, in fields like art, health, science, and human services. You can get a grant to help defray the cost of installing renewable energy systems in your home; a grant to conduct scientific research; a grant to pay for living expenses while you take time off work to write a book. For more information on grants offered by the U.S. government, visit benefits.gov.

Like student-based scholarships, grants may be offered to specific individuals based on their gender, ethnicity, financial need, or other factors. Grants also require an application, and grant-writing is an entire industry thanks to the intricacies of the application process. (After all, we are talking about billions of dollars in free money!) One major limitation of government grants is they are generally not available to non-U.S. citizens.

After a grant or scholarship is awarded, it’s still up to the recipient to continue meeting whatever compliance standards are required—at the baseline, a minimum GPA is usually required. A student on an athletic scholarship have to stay on the team and maintain passing grades; a student who received a grant to perform research must continue that research.

Are there other options?

There are a few other ways that students pay for their education, including:

  1. Student loans, which must be repaid.
  2. Tuition reimbursement, which is offered by some employers to help put their employees through a work-related degree program. It may cover just a few courses or the entire cost of your education.
  3. Work-study, a federal program that provides funds to eligible students for part-time employment, often at the college itself. Usually the institution pays half the student’s wages, and the government pays the rest.

There is no shortage of options for paying for your education—so do your homework! It’ll be good practice!

About the Author Scott Hawksworth

Scott Hawksworth is YesCollege.com's founder and podcast host. His goal with the show is to not only help prospective students gain first hand knowledge about the degree programs they'll enroll in, but to also highlight the careers of fantastic professionals in higher ed. Scott has a Bachelor of Science degree in business administration from The Ohio State University.