Understanding College Grants And Loans: What's The Difference?

College grants are a form of financial aid that does not need to be repaid, unlike student loans. They are offered by federal and state governments, colleges, and third-party organizations to help students cover the costs of higher education. Grants are typically need-based, while scholarships are often merit-based, and both are considered gift aid. The amount of financial aid awarded through grants and scholarships varies, but they can significantly reduce the amount of student loan debt accrued during college.

College grants are financial aid that doesn't need to be repaid

College grants are a form of financial aid that does not need to be repaid. They are distinct from student loans in that respect, as well as in that they are often need-based, whereas student loans are not. Grants are available from a variety of sources, including federal and state governments, colleges, and third-party organisations.

To be eligible for a college grant, you usually need to demonstrate financial need. However, merit-based scholarships, which also do not need to be repaid, are another source of free money for college. Scholarships are often awarded based on academic, athletic, or artistic merit, rather than financial need. Both grants and scholarships are considered gift aid, but it's important to note that, in some rare cases, you may have to repay your scholarship or grant if certain conditions are not met. For example, if you withdraw early from your course or fail to meet a GPA requirement.

The first step in applying for a college grant is to fill out the FAFSA (Free Application for Federal Student Aid). This will determine how much financial aid you qualify for and whether you are eligible for any federal grants. The FAFSA will also be used by the colleges that accept you to determine your financial aid package, which may include grants, scholarships, work-study, and federal student loans. It's important to submit the FAFSA as early as possible, as some grants are awarded on a first-come, first-served basis.

In addition to federal grants, you can also apply for state grants and private grants. Each state has its own grant and loan programs, and you can search for private grants using the U.S. Department of Labor's free scholarship search tool. It's a good idea to apply for as many opportunities as possible to maximise your chances of receiving aid and lowering your college costs.

Grants are often need-based, while scholarships are merit-based

College can be expensive, and many students require financial aid to cover the costs. Financial aid can come in the form of loans, grants, tax credits, scholarships, and work-study programs. There are two basic categories of financial aid: merit-based and need-based. Need-based aid is the most common type of financial aid awarded to U.S. college students. This type of aid includes institutional grants and scholarships, state and federal grants, federal work-study, and federal loans.

Grants are often need-based, meaning that they are awarded based on financial need. To qualify for a grant, students often must fall below a certain income threshold. The most common types of need-based aid come from the government, but there are also programs available through nonprofits and businesses that want to help low-income individuals in their communities. Need-based scholarships are also available and are awarded based on financial need. Federal Pell Grants are an example of a need-based grant, geared toward undergraduate students who have not earned a degree yet but have demonstrated financial need. The Federal Supplemental Educational Opportunity Grant (FSEOG) is another need-based grant, allowing participating colleges to provide additional grants of $100 to $4,000 per year to students with exceptional financial need.

Scholarships, on the other hand, are typically merit-based, meaning they are awarded based on academic or athletic achievement, artistic or musical talent, or other extracurricular achievements and activities. For these awards, financial need is not a factor, so students with higher incomes can often qualify. Scholarships may be offered by parents' or guardians' employers, nonprofit organizations, private businesses, colleges and universities, or community foundations. Merit-based scholarships often have a committee that reviews applicants' qualifications to determine who should receive the award. Many schools will automatically award merit-based scholarships if students score within a certain range on their SAT or ACT tests.

It is important to note that some scholarships may be awarded based on a combination of merit and need. Additionally, not all colleges and universities offer both types of financial aid. Merit-based opportunities are more common at smaller private schools, while students at larger public institutions tend to receive most of their financial support from need-based sources.

FAFSA must be completed to apply for federal grants and other financial aid

College grants are a form of financial aid that does not need to be repaid. They are often based on financial need and are available through the federal government, state government, colleges, or third-party organisations. To access these grants, you must complete the Free Application for Federal Student Aid (FAFSA). FAFSA is the key form for accessing not only grants but also federal student loans and work-study programs. It is the gateway to all federal student financial aid, including the Pell Grant program.

The FAFSA must be completed to apply for federal grants and other financial aid. It is a crucial step in the financial aid process, as it is the primary way to access federal grants, loans, and work-study opportunities. The U.S. Department of Education awarded approximately $114.1 billion in federal grants, loans, and work-study funds in the fiscal year 2023, according to the Federal Student Aid annual report. This demonstrates the significant amount of financial aid available through the FAFSA.

Completing the FAFSA is free and provides students with access to the largest source of financial aid for school. It is important to note that the FAFSA is not just for grants but also for other forms of financial aid, including federal student loans and work-study programs. Even if a student is not eligible for a federal grant, they may still qualify for work-study or federal loans through the FAFSA. The number of family members in college is no longer a factor in the financial aid calculation, so students from larger families should not be deterred from applying.

The FAFSA is typically due by June 30 of the following academic year, although deadlines may vary by school. It is recommended to start the application process early and gather all the necessary information before beginning the FAFSA form. Students can create an account and obtain a Federal Student Aid (FSA) ID to sign and submit their FAFSA form. After submitting the application, it is important to check its status to ensure it has been processed and review the summary report to make any necessary corrections by the due date.

Completing the FAFSA is a crucial step in accessing federal grants and other financial aid for college. It is a free and straightforward process that provides students with the opportunity to receive financial assistance for their education. By applying for the FAFSA, students can maximise their chances of receiving the financial support they need to pursue their academic goals.

Grants are available through federal/state governments, colleges, and private entities

College grants are a form of financial aid that you don't need to repay, and they can be used to cover higher education costs. These grants are often based on financial need and are available from a variety of sources, including federal and state governments, colleges, and private entities.

The federal government offers grants to help finance a range of services, including education, and the Department of Education administers grant funding programs to promote student achievement and ensure equal access. Federal Pell Grants, for example, are geared towards undergraduate students with financial need who have not yet earned a degree.

State governments also receive grants from the federal government, which can be used to support education and other services within their states. These grants provide significant funding for local communities and have a substantial impact on the lives of residents.

Colleges and universities themselves may also offer grants to students, and it is worth checking with your institution to see what opportunities are available. These grants can be a great way to lower the cost of attendance and reduce student loan debt.

Finally, private entities and organizations also provide grants for college students. These grants may be distributed directly to the student or to the university, and they can be a great way to maximize your financial aid.

By exploring these various sources of grants, students can increase their chances of receiving financial assistance and reducing their reliance on student loans. It is important to note that grants are often need-based, and students may need to demonstrate financial need to be eligible. However, by applying for multiple opportunities and completing the FAFSA, students can improve their chances of securing grant funding for their college education.

Examples of grant and loan programs include TEACH, FORWARD, and TEXAS

TEACH, FORWARD, and TEXAS are examples of grant and loan programs that can help students pay for their college education. Here are the details of each program:

TEACH Grant Program

The TEACH Grant Program, or Toward Excellence, Access, and Success Grant, is a federal program that provides grants to students who agree to teach in high-need fields or at low-income schools. To be eligible, students must meet certain academic requirements and commit to teaching for a specified period after graduation. TEACH Grants can provide a significant source of funding for students pursuing a career in education.

FORWARD Loan Program

The FORWARD Loan Program, which stands for Future Occupations & Reskilling Workforce Advancement to Reach Demand, offers low-interest loans to students enrolled in specific programs. These programs are typically within the fields of energy, nursing/patient care, teaching, technology, and transportation/logistics. The FORWARD Loan Program is designed to support students pursuing high-value credentials and in-demand occupations.

TEXAS Grant Program

The TEXAS Grant Program provides funds to eligible students attending General Academic Teaching Institutions (GATIs) in Texas, excluding Lamar State College-Orange and Lamar State College-Port Arthur. This program aims to enhance access to higher education for Texas residents and is authorized by the Texas Higher Education Coordinating Board. The TEXAS Grant is a need-based grant that considers factors such as academic achievement and financial need.

Other Texas Grant and Loan Programs

In addition to the TEXAS Grant, the Texas Higher Education Coordinating Board offers various other grant and loan programs. These include the Transfer Grant, which was available during the 2022-23 academic year, and the Texas College Work-Study (TCWS) program. Texas also previously offered the Texas B-On-Time (BOT) Student Loan program, which has since been discontinued.

Frequently asked questions