Ask Cappex: The Difference Between Grants and Scholarships

In Paying for College on Aug 05, 2016

Our college expert Mark Kantrowitz answers your questions about college and financial aid.

Q: What are the differences between grants, merits and scholarships? Which are more attainable and what should I apply for?

A: Grants and scholarships are both forms of gift aid, which is free money that does not need to be earned or repaid.

The terms “grant” and “scholarship” are often used interchangeably, but refer to slightly different types of gift aid.

  • Grants tend to be based on financial need. For example, the Federal Pell Grant is the largest need-based grant program.
  • Scholarships tend to be based on merit, such as academic merit, artistic merit or athletic merit. Scholarships can also be awarded based on strange skills, such as creating a prom costume out of duct tape or singing the national anthem with sincerity. You can also win a scholarship if your last name is Baxendale, Gatling, Scarpinato or Zolp. The National Merit Scholarship Program is one of the largest merit-based scholarship programs.

Note that some scholarships may also determine eligibility or the amount of the award based in part on financial need. Some colleges award scholarships as a recruiting tool, to help them attract wealthier students. These scholarships may be called merit scholarships, but really are just non-need-based scholarships.

To apply for need-based grants, file the Free Application for Federal Student Aid (FAFSA) at The FAFSA is used to determine eligibility for financial aid from the federal government, state government and most colleges and universities. About 200 mostly private colleges also use the CSS/Financial Aid PROFILE form to determine eligibility for the college’s own grant funds.

To find merit-based scholarships, search a free online scholarship matching service, such as These services match your background with a large database of scholarships, providing you with information about just the scholarships for which you are eligible. Scholarships are awarded by foundations, corporations, non-profit organizations, unions, professional organizations and philanthropists. Each scholarship will have its own selection criteria, application forms and deadlines.

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