Differences between Grant and Scholarship

Grant vs. Scholarship

Grants and scholarships are forms of financial aid that help students pay for education costs. Both are considered gift aid, meaning they typically do not need to be repaid, unlike student loans. The primary distinction between them lies in the eligibility criteria. Grants are most often awarded based on financial need, while scholarships are generally merit-based.

Comparison Table

Category	Grant	Scholarship
Primary Basis	Typically need-based, determined by family income and financial circumstances.	Primarily merit-based, awarded for academic, athletic, or artistic achievement.
Main Providers	Federal government, state governments, and educational institutions.	Colleges, private foundations, businesses, and nonprofit organizations.
Application Process	Often requires submission of the Free Application for Federal Student Aid (FAFSA).	Usually involves a separate application, which may include essays or interviews.
Repayment	Generally not required, unless a student withdraws from a program early or fails to meet specific conditions.	Not required, though some may have conditions such as maintaining a certain GPA.
Taxability	Generally not taxable if used for qualified education expenses like tuition and required fees.	Not taxable when used for qualified education expenses; funds used for other costs like room and board may be taxable.

Venn diagram comparing Differences between Grant and Scholarship

Grants

A grant is financial assistance provided to a student based on demonstrated financial need. The amount awarded is often determined by the information provided on the FAFSA. The largest providers of grants are federal and state governments. A well-known example is the Federal Pell Grant, which provides funding to undergraduate students with exceptional financial need. Colleges and universities also offer institutional grants. While grant money is generally not repaid, there are circumstances where a student might have to pay it back, such as withdrawing from school before the end of a semester.

Scholarships

A scholarship is a financial award for students based on achievement in various areas. These can include academic performance, skill in a particular sport, artistic talent, or community service involvement. While some scholarships may consider financial need, the primary factor is merit. Scholarships are offered by a wide range of sources, including schools, private companies, non-profits, and community groups. The application process for scholarships often requires more than just a financial aid form; it can involve essays, letters of recommendation, and interviews. Like grants, scholarships do not have to be paid back, but recipients may need to meet certain requirements to maintain their award, such as keeping their GPA above a specified level.