Free Money for College: Understanding Grants and Scholarships
All schools offer free money, or “gift aid” to discount the cost of college with grants, scholarships, or a combination of both. This is money that DOES NOT have to be repaid.
Grants are based on need. This is endowment money a school gives out to cut your cost because you qualified for financial need based on your FAFSA and/or CSS Profile. Grants are awarded from the colleges themselves, state funded programs, or federally funded programs (most notably Pell Grants or FSEOG). Any need-based aid, including grants are reassessed every year based on your financial aid forms. This means that you may not always be awarded the same amount of grant money each year. If you get a raise, or inherit money, or win the lottery, expect your grant award to be less or even go away the following school year. If you lose a job, or have a financial emergency or significant loss, your grant money may increase.
Scholarships are based on merit. Some of the most common merit scholarships are awarded for academics (usually based on your grades and/or test scores), a talent (e.g. art, music, acting), and athletics. Scholarship criteria and award amount is set by the school or program awarding the money. Scholarship amounts are typically guaranteed for up to four years of college. This means that when you are awarded a scholarship before your freshman year of college, you can count on receiving that same amount each year as long as you meet the renewal requirements for the award.
Some schools (particularly the Ivies and highly selective schools who don’t award merit aid) may refer to a need-based aid award as a scholarship. When you receive your financial aid award letter make sure you understand what money is need-based vs. merit based. It is important to clarify with a school, and not assume that your scholarship is based solely on merit. If it isn’t explained thoroughly in your award letter, reach out to the school’s financial aid department and ask the question. You want to have a clear picture of what money you can count on receiving each year (merit-based aid), and what money could possibly change based on your financial situation each year (need-based aid).
Grants and scholarships are free money for school. Maximize these opportunities to decrease the amount of money you have to pay for your college education. You can have an affordable college education if you make informed, smart, financial choices.