What Education Grants Are and How They Differ From Loans
Education grants are money from federal or state governments, colleges, or private organizations that you do not have to repay. Unlike loans, which require you to pay back every dollar plus interest, grants are gifts. The federal government gives out the largest grants through programs tied to FAFSA — mainly the Pell Grant, which goes to undergraduate students from lower-income families.
The key difference matters for your wallet. A $5,000 loan costs you $5,000 plus years of payments. A $5,000 grant costs you nothing. Most students who receive grants get them because of financial need, though some grants target specific majors, backgrounds, or circumstances. Once you receive a grant, you keep it even if your situation changes — you do not have to pay it back if you drop out, change schools, or graduate.
Grants come with one real condition: you must maintain a minimum grade point average (GPA), usually 2.0 or higher, to keep receiving them. If your GPA falls below that threshold, the college will suspend your grant until you bring it back up. This is different from a loan, which you owe regardless of your grades.
Key Takeaways
- Federal Pell Grants, the largest grant program, go to undergraduate students whose family income and assets fall below set limits, with awards ranging from roughly $700 to $7,395 per year depending on your Expected Family Contribution and enrollment status.
- You must complete FAFSA to be considered for federal grants, and your FAFSA results determine both your may be able to access and the amount you receive.
- State grants, college grants, and private grants exist alongside federal programs, and you can receive multiple grants at the same time as long as your total aid does not exceed your cost of attendance.
- Grants have fewer strings attached than loans, but you must maintain satisfactory academic progress — usually a 2.0 GPA — to keep receiving them.
- Some grants target specific groups: teachers, nurses, military families, or students from particular states or backgrounds, so searching beyond the main federal programs can uncover money you did not know existed.
The Federal Pell Grant: The Largest Grant Program
The Federal Pell Grant is the foundation of federal grant money. For the 2024–2025 school year, the maximum award is $7,395 per year for full-time undergraduate students. The actual amount you receive depends on your Expected Family Contribution (EFC) — a number calculated from your FAFSA that reflects what the government thinks your family can afford to pay.
To receive a Pell Grant, you must be a U.S. citizen or may be able to access noncitizen, enrolled at least half-time in an undergraduate program, and have financial need. Your school's financial aid office determines your need by subtracting the cost of attendance from your EFC. If your EFC is very low and your school is expensive, you get the maximum grant. If your EFC is higher or your school costs less, you get less.
The Pell Grant is not automatic. You must submit FAFSA, and your school's financial aid office must process your results and notify you of your award. This usually happens within a few weeks of submitting FAFSA, though it can take longer if the government requests additional documents. Once you know your Pell Grant amount, the school applies it to your bill, and any leftover money is typically sent to you as a refund.
Other Federal Grants Beyond the Pell
The federal government runs several smaller grant programs alongside the Pell. The Federal Supplemental Educational Opportunity Grant (FSEOG) is for undergraduates with exceptional financial need — usually those with the lowest EFCs. Awards range from $100 to $4,000 per year, and your school controls how much money it receives and how it distributes it. Not every school participates, and not every student who qualifies receives one.
The Teacher Education information for College and Higher Education (TEACH) Grant provides up to $4,000 per year to students who commit to teaching in a high-need field (math, science, special education, English as a second language) at a low-income school for at least four years after graduation. If you do not meet the teaching commitment, the grant converts to a loan you must repay with interest.
The Iraq and Afghanistan Service Grant is for students whose parent or spouse died in military service in Iraq or Afghanistan on or after September 11, 2001. The grant amount matches the Pell Grant maximum for that year. You do not need to submit a separate process — FAFSA flags you for this grant if you meet the criteria.
State Grants and How They Stack With Federal Money
Every state runs its own grant programs, and the rules vary widely. Some states offer grants only to residents attending in-state schools. Others allow residents to take state grant money to out-of-state colleges. Award amounts range from a few hundred dollars to several thousand per year, depending on the state and your financial need.
To find your state's grants, visit your state's higher education agency website — usually listed under "[Your State] Department of Education" or "[Your State] Higher Education Board." Many states tie their grants to FAFSA results, so completing FAFSA automatically puts you in the running. Others require a separate process or have their own income limits and important date.
You can receive federal grants, state grants, and college grants all at the same time. However, your total aid from all sources cannot exceed your cost of attendance. If you receive more than that, your school must reduce one or more of your grants. This is called "overaward," and it protects you from receiving more money than you actually need.
College and University Grants From the School Itself
Most colleges and universities give out their own grant money, often called institutional grants or merit scholarships. These come from the school's endowment, operating budget, or donations. Unlike federal and state grants, college grants do not require FAFSA, though many schools use FAFSA information to decide how much to give you.
College grants fall into two categories: need-based and merit-based. Need-based grants go to students who cannot afford to pay full tuition. Merit-based grants reward academic achievement, athletic ability, artistic talent, or other accomplishments. Some schools offer both — a need-based grant plus a merit scholarship. Others offer only one or the other.
When you explore to a college, the financial aid office automatically considers you for institutional grants. You do not usually have to ask or fill out a separate form. However, some schools have additional scholarships for specific majors, backgrounds, or circumstances that require a separate process. Check your school's financial aid website or call the office to ask what additional grants you might be missing.
Private Grants and Scholarships From Organizations
Private organizations — corporations, nonprofits, professional associations, and community foundations — give out grants and scholarships to students. These are often smaller than federal or college grants (typically $500 to $5,000), but they add up, and many have less competition than the big federal programs.
Private grants often target specific groups: first-generation college students, students from particular states or counties, students pursuing certain majors, students from specific ethnic or religious backgrounds, or students whose parents work in certain fields. Some are one-time awards; others are renewable each year if you maintain your GPA.
Finding private grants requires searching. Start with your school's financial aid office — many maintain lists of scholarships their students have won. The College Board's Scholarship Search tool and FastWeb are free databases where you create a profile and receive matches based on your background and goals. Be cautious of sites that charge fees to search for grants; legitimate grant databases are free.
How Your School Applies Grants to Your Bill
Once you receive grant awards from all sources, your school's financial aid office combines them into a financial aid package. The school applies grants to your bill in this order: tuition and fees first, then room and board (if you live on campus), then books and supplies. Any money left over after covering these costs is refunded to you.
You do not have to do anything to receive the refund — the school sends it to you automatically, usually by check or direct deposit. This refund money is yours to use for any education-related expense: a laptop, transportation, childcare, or living costs. Some students use refunds to cover work-study or other costs that are not part of the official bill.
If you receive more grant money than your bill costs, the school must refund the overage within a set timeframe — usually 14 days. If you receive less grant money than your bill costs, you will owe the difference. This is where loans, work-study, or your own savings come in.
Maintaining Your Grants: GPA and Satisfactory Academic Progress
To keep receiving grants, you must maintain satisfactory academic progress (SAP). This means earning a minimum GPA (usually 2.0) and completing a minimum number of credits each term. If your GPA falls below 2.0 or you do not complete enough credits, your school will suspend your grants.
Suspension is not permanent. You can regain your grants by raising your GPA back above 2.0 or completing the required credits. However, you will not receive grant money while suspended — you will have to pay out of pocket or use loans. Some schools offer academic probation or a grace period before suspending grants, so check your school's specific policy.
Satisfactory academic progress also includes a maximum timeframe for degree completion. If you take longer than 150 percent of the published length of your program (for example, six years for a four-year degree), you may lose grant may be able to access. This is less common but matters if you change majors or take time off.
Frequently Asked Questions
Do I have to repay a grant if I drop out of school?
No. Grants do not have to be repaid under any circumstance. However, if you received a refund and then dropped out, your school may ask you to return part of the refund. This depends on when you dropped out and your school's refund policy. Check with your financial aid office before withdrawing.
Can I receive grants from multiple sources at the same time?
Yes. You can receive a Pell Grant, a state grant, a college grant, and private scholarships all in the same year. Your school combines them into one package. The only limit is that your total aid cannot exceed your cost of attendance — if it does, your school will reduce one or more grants.
What happens to my grant if I change schools?
Federal grants like the Pell follow you to any accredited school. State grants may not — some states require you to attend an in-state school to keep the money. College grants are specific to that college and do not transfer. When you transfer, contact your new school's financial aid office to find out what grants you can bring with you and what new grants you may be offered.
Can I get a grant if my family makes too much money?
Federal grants are based on financial need, which is determined by your FAFSA results. If your family income is high, you may not may have access to for a Pell Grant. However, you may still may have access to for merit-based college grants or private scholarships that do not consider income. Some state grants also have higher income limits than federal programs.
Do I have to be a U.S. citizen to receive a grant?
Federal grants require U.S. citizenship or may be able to access noncitizen status. may be able to access noncitizens include permanent residents, refugees, and asylees. Undocumented students do not may have access to for federal grants but may may have access to for state or college grants depending on where they live and study. Contact your school's financial aid office to discuss your specific situation.