There is some confusion about the different types of student financial aid that are available today. One of the most frequently asked questions is about the difference between grants and scholarships.

Grants and Scholarships

Grants and scholarships are similar in that they are both essentially free money that does not need to be repaid – and for that reason they should be the type of student financial aid you seek first, before you consider loans. Grants and scholarships are different, however, in their sources of funding, the purposes they support, and the basis they are awarded on.


Grants are disbursed on the basis of a student’s financial need, or in order to support a specific project, which is generally research. Most grants are federally sponsored, meaning that they are paid for at least in part by federal funds. The process of applying for grants begins with completing the Free Application for Federal Student Aid, or FAFSA.


student financial aid

Student financial aid is available and attainable.

Scholarships are an entire area unto themselves. They are often funded by private organizations or individuals, and may be used to support either very broad or very targeted goals. Many scholarships are awarded on the basis of merit, without regard for the recipient’s financial need. Scholarships may involve only modest amounts of money, or be available to a limited pool of applicants – for example, an annual civic club scholarship of $500 may be available only to recent graduates of the local high school.

Because scholarships tend to reward merit, however, even small awards carry a value beyond their financial worth by indicating that this group or individual thought you were outstanding in some way. To find out more about scholarships and how to find and apply for them, go to the college scholarships section of our website.

Work Study Programs

Work study programs are administered by colleges and universities, and provide recipients with a certain number of hours of paid work over the academic year. In addition to providing much needed funds, work study programs can provide you with great work experience. Co-ops (work-study agreements that involve off-campus employment) in particular can help you make contacts with potential employers and lead to a job when you graduate. They can also help you ensure you are happy with the career your college major is preparing you for, before graduation. The value of this can be vouched for by the many graduates who change careers soon after graduating from college, when they find out that they just don’t like the kind of work their degree qualified them for.

Alternative Programs

While we do not wish to write volumes on the subject, our discussion of student financial aid types would not be complete without mentioning alternative financial aid programs. Military enlistment, employer support, and various tax credits may all be worth further investigation, depending on your situation, needs, and interests.


Loans are completely different from grants and scholarships in that they must be repaid with interest. Click here for a more in-depth discussion of student loans.