Do You Have to Repay Grants?

by Nicole LaMarco - Updated October 22, 2018

Chances are that you do not feel fully conversant with what grants are meant for and how exactly a grant or grant repayment works. In that case, it’s important to get a complete understanding of how a grant works. Many people commit the mistake of thinking that a grant is a form of free money. It isn’t. However, by the nature of a grant, it is very rare that you have to repay one.

Grants are also not loans. They can be awarded by a wide range of bodies, including individuals, private organizations and local, state and federal governments. Whenever a grant is offered by the federal government – what we call a federal grant – it has to be authorized by a law of the United States and should be awarded specifically by a federal agency to provide financial assistance for the recipient in order that the recipient may fulfill or support a public purpose. If the individual does not fulfill or support a public purpose, then he cannot be eligible to receive a federal grant.

Tips

  • Grant repayment is normally not required. However, there are some circumstances that require a grant to be repaid.

The Nature of Grants

One of the characteristics of grants that distinguishes them from the simple doling out of free money is the fact that a grant comes with accountability. When an individual receives a grant, it is always for a very specific purpose. That purpose could be an artistic endeavor, some research, an educational endeavor or even something as simple as a home improvement. It doesn’t really matter for which one of countless beneficial endeavors a grant is given; what matters is that it is given for a very specific purpose.

When the grant maker gives the grant, it will require some kind of assurance from the grant recipient that the funds of the grant are being used in the proper manner. As long as the grant funds are being used in a transparent and accountable manner, then they do not have to be paid back.

Scholarship Database and Other Grant Sources

One of the largest providers of grant money actually happens to be the U.S. government. It provides more than 1,000 grant programs, like the Pell Grant, every year in many different categories. In turn, these grant programs are issued by 26 different federal grant-making agencies. All government grants can be found on the website Grant.gov, which is the central information hub for all matters pertaining to U.S. government grants, and a major scholarship database. This website is maintained by the Department of Health and Human Services.

On the other hand, there are private grants. Just like public ones, these grants do not have to be repaid. You can locate private foundations that make grants on a few websites, including the Community of Science at cos.com, the Foundation Center at foundationcenter.org and the Sponsored Project Information Center, or SPIN, which can be found in just about any public library.

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The Overpayment of Grants

There are special situations where you may find yourself having to pay back either some or all of the grant you have received. There are two common reasons for this. The first is that you received more money under the grant than you were meant to receive. This is called an over-award and, while rare, it sometimes happens. It is commonly caused by errors in the calculation of the grant for which you were eligible. The other potential reason is that you withdrew from the grant program early or failed to fulfill the obligations stipulated under the grant.

Grants for the Repayment of Loans

One of the things that confuses students who have student debt from their college years is how a grant can be used to repay some of their student loan. These grants are known as student loan grants and are awarded with the specific purpose of retiring a student loan. Unlike the student loan itself, however, the grant does not need to be repaid.

About the Author

Nicole is a business writer with nearly two decades of hands-on and publishing experience. She's been published in several business publications, including The Employment Times, Web Hosting Sun and WOW! Women on Writing. She also studied business in college.

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