What are College Financial Aid Grants and Scholarships?
This time of year, many families receive financial aid award letters from prospective colleges and universities. As these letters are opened, many offers are being made. These include work-study programs, student loan options, and what I consider to be free money — college financial aid grants and scholarships.
By free money I mean you won’t have to pay back or earn scholarships and grants in the same way you do loans and work-study. For this reason, these awards tend to be the most sought-after for families applying for financial aid. Let’s take a look at grants and scholarships and what you need to know.
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What is a scholarship?
Generally, a scholarship is an award presented to a student based on their merit. As a result, it’s common for schools to refer to these awards as merit-based scholarships. These tend to be awarded by the admissions office of the college or university. They are based on information including but not limited to the student’s test scores, GPA, extra-curricular activities, and more. Scholarships tend to be renewed year over year at the same rate if the student can maintain certain criteria. For example, some schools require students to meet a GPA requirement as well as remain registered as a full-time student to qualify for the scholarship.
What is a grant?
A grant is generally a need-based award that is determined by the family’s financial information submitted on the FAFSA and/or CSS Profile. These are handled by the financial aid office. If a family has an increase or a decrease in earnings year to year, the total grant received could change. For this reason, families need to complete financial aid forms each school year to be considered for grants as returning students.
Is this always the case?
You’ll notice I used the word ‘generally’ when describing both of these. While it would be nice if things were straightforward, it’s not always the case with college financial aid. Some schools use the words interchangeably. Some schools use scholarships to refer to need-based aid. Sometimes grants are merit awards. Sometimes the awards are a hybrid of both.
For this reason, it is important for you to confirm with the school what the renewal requirements are for the scholarships or grants you receive. They will be able to share this information with you so you can make the best decision for your family and in order to avoid surprises in the future.