Grants and scholarships are the best form of financial aid, because they do not have to be paid back. (The terminology can get a little confusing. The term "grants" usually, but not always, refers to need-based awards. The term "scholarships" usually refers to awards that are not tied strictly to financial need.) Most of this gift money comes from the federal government through the Pell Grant program. The states, as well as schools themselves, also provide significant amounts of both grants and scholarships.
Private scholarships are another source of education funding. Based on data from the National Postsecondary Student Aid Study (NPSAS:16), a total of $6.1 billion in undergraduate scholarships was awarded by foundations, corporations, philanthropists and other private sources in 2015-2016, accounting for about 6 percent of grant-based aid and 3 percent of all student aid. Approximately 8 percent of undergraduate students received private scholarships with an average value of $3,852. Of students in Bachelor's degree programs, about 1 in 8 is using private scholarships to pay for college.
An additional $1.3 billion is available in the form of fellowships for graduate and professional students. More than 5 percent of graduate and professional students receive private fellowships with an average value of $6,752.
While small in comparison to other grant sources, private scholarships are a critical piece of the paying for college puzzle for many families. You may find it well worth the effort to seek out and apply for private scholarships. Your local library will have books offering information about private scholarships, and a number of scholarship "search" services can be found on the Internet. A couple of the best free search websites are:
Other free scholarship search sites are listed in the article, How to find scholarships for college.
The Federal Trade Commission advises that you beware of scholarship scams. Services that "guarantee" money for college in exchange for an upfront fee can be rip-offs. Read the FTC's consumer alert HERE before paying for such a service.