The Role of Scholarships and Grants in Financing Education

On Dec 24, 2023

Applying for scholarships and grants helps students pay for college. In some situations, these awards allow people to obtain a degree they wouldn’t be able to otherwise. Students who apply for various awards often find they help cover the costs of other college-related expenses.

Here’s a closer look at today’s college tuition, the importance of applying for scholarships and grants and how to get your hands on free money for school.

The Rising Costs of Higher Education

According to 2023 data by the Education Data Initiative, public four-year in-state college tuition is $26,027 annually — $104,108 total for four years of attendance. Out-of-state students could pay upwards of $108,364 to obtain a degree.

College expenses have risen by 4.94% since 2015 nationally. However, those costs don’t include school supplies, books, room and board, student life fees, clothes, health care, food and transportation. For some students, the rising costs of higher education make getting a degree unattainable.

As a result, they could miss out on professional opportunities, a livable salary and greater health outcomes. A 2023 study from the Center on Children and Families at Brooking uncovered significant socioeconomic gaps in college enrollment — 51% of students from low-income households attend college, compared to 89% of students from higher-income families.

Even with student loans, college can be a financial risk for individuals from underserved communities and low-income households. After all, many have to pay back astronomical loan debts following graduation.

Scholarships and grants are advantageous for individuals with exceptional financial need. In most situations, these awards are nonrepayable. Therefore, financing one’s education with scholarships and grants is an excellent way to offset costs and reduce debt later.

Defining Scholarships and Grants

Although scholarships and grants are both forms of financial aid for higher education, they have different meanings. For example, companies, schools and organizations will offer scholarships to students, while grants are provided through federal and state governments. Likewise, it is crucial to understand the different types of awards to know what you or your children are applying for.

Scholarships

Scholarships are either merit or needs-based. Typically, students receive scholarship awards based on their academic performance, skills, athletics, extracurricular activities or program of study. For example, the Flywire Charitable Foundation awards $5,000 to students interested in sustainability, social justice and global health.

Likewise, higher education institutions also reward students for making significant academic contributions within their program of study. You might apply for a scholarship through your college’s Bioengineering or Social Work departments with a recommendation from a professor.

Sometimes, needs-based scholarships are available to outstanding students from underrepresented communities and groups, particularly those who are not financially secure or whose families cannot afford college tuition. In some instances, an awarding institution or organization will offer a prize for a semester, academic year or annually for the duration of enrollment.

Grants

Unlike scholarships, government-issued grants are almost always needs-based. There are four primary types of college grants as follows:

Federal Pell Grants: Available to undergraduate students demonstrating critical financial need who have not earned a degree.
Federal Supplemental Educational Opportunity Grants (FSEOG): Also awarded to undergraduate students with financial need, with priority given to Federal Pell Grant recipients.
Teacher Education Assistance for College and Higher Education (TEACH) Grants: Awarded to students from low-income families pursuing an education degree to teach at public or private schools.
Iraq and Afghanistan Service Grants: Ineligible students for Pell Grants whose parents served and died during active duty in Iraq or Afghanistan after September 11, 2001.

Unlike scholarships, you may need to repay part or all of a Federal Pell Grant or FSEOG under unique circumstances. For example, you might withdraw from the program you received the commission for or change your enrollment status from full-time to part-time.

Likewise, you might have to repay a TEACH grant if you drop out of an education program or don’t fulfill your four-year teaching obligation after graduation.

Positive Outcomes of Seeking Financial Aid

Earning scholarship or grant money means you’ll have less to repay in student loans. College debt remains a serious problem as student loan debt has risen 302% in the U.S. since 2004. On average, students accrue $32,731 in debt for their higher education.

If college award money allows you to obtain a degree, imagine the positive outcomes of having one. Many people question whether a degree is worth it in today’s economy. Despite employers…