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Home » Plan for College » Scholarships » College Grants » What is Gift Aid and How To Pay for College With It
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  • Types of Gift Aid
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What is Gift Aid and How To Pay for College With It

Rebecca Doucette
By Rebecca Doucette
Updated on March 4, 2025
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Gift aid is financial help for students that doesn’t need to be repaid—it’s like a free gift. It includes grants, which are usually based on financial need, and scholarships, often awarded for achievements like academics, athletics, or special talents. 

The main advantage of gift aid is that it reduces the cost of college for students, allowing them to focus more on their studies and less on the cost of tuition and other expenses.

Types of Gift Aid

Federal Grants

Federal grants are grants are funded by the federal government and typically do not need to be repaid. They are primarily awarded based on financial need. Here are two prominent types of federal grants:

  • Pell Grants are among the most well-known and accessible forms of federal aid. They are awarded to undergraduate students who demonstrate significant financial need. The amount awarded can vary yearly based on federal funding levels, the student's financial need, the cost of attendance, and their status as a full-time or part-time student.
  • Federal Supplemental Educational Opportunity Grants (FSEOG) are awarded to undergraduate students with exceptional financial need. Priority is given to Pell Grant recipients with the most demonstrated need.   Unlike Pell Grants, FSEOG funds are limited and are awarded by the financial aid office at participating schools, making early application crucial.

State Grants

State grants are financial aid programs funded by individual states to support residents attending college within those states. These grants often have criteria that reflect the state’s education policies and budget.

Institutional Scholarships

Institutional scholarships are offered by colleges and universities and can be a significant source of gift aid. These scholarships can be either merit-based or need-based.

  • Merit-based scholarships are awarded based on a student's achievements, such as academic excellence, leadership qualities, artistic talents, or athletic skills. Each institution has its own criteria for awarding these scholarships.
  • Need-based scholarships are awarded based on a student's financial circumstances. These scholarships aim to bridge the gap between the cost of attendance and what a student’s family can afford to pay.

Private Scholarships

Private scholarships are funded by external organizations, such as foundations, corporations, civic groups, and religious institutions. They often have specific criteria and are awarded based on a wide range of factors.

How to Apply for Gift Aid

Completing the FAFSA®

The FAFSA is the starting point of the financial aid application process. This form collects information about your financial situation and which helps determine your eligibility for federal, state, and institutional aid programs.

The FAFSA is important because it serves as the primary application for most types of financial aid. This includes federal grants, state grants, and institutional scholarships. By completing the FAFSA, you open the door to a lot of funding opportunities that can significantly reduce the cost of your education.

While the FAFSA facilitates  the primary source of federal aid,  it’s essential to actively search for other forms of aid such as scholarships offered by states, institutions, and private organizations.

Applying Early

  • Importance of Early Application: Many aid programs operate on a first-come, first-served basis. Submitting your FAFSA and scholarship applications early increases your chances of receiving funds before they run out.
  • Benefits of Being Proactive: Early applicants often have access to a broader range of funding options and can receive award notifications sooner, allowing more time for financial planning.

Maintaining Eligibility

Academic Requirements: Most forms of gift aid require maintaining a certain GPA or full-time enrollment status. Regularly check your academic standing to ensure you remain eligible.

Renewal Processes for Multi-Year Awards: Understand the renewal criteria for scholarships and grants that offer funding for multiple years. This often involves reapplying annually and meeting academic benchmarks.

By following these guidelines and staying diligent throughout the application process, you can effectively secure the gift aid needed to pursue your educational goals.

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May 13, 2025
Paying for college can be challenging. There are a number of resources to help by providing free money in the form of scholarships, grants or reimbursement.
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College grants are monetary gift-aid usually based on financial need to assist in paying for school tuition, fees, and other school-based expenses that are not usually required to be paid back
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