Which grant is awarded to undergraduate students who demonstrate exceptional financial need and does not require repayment?

The correct choice is the Pell Grant, which is specifically designed for undergraduate students who exhibit exceptional financial need. The Pell Grant is a federal grant that does not require repayment, making it a vital financial resource for many students pursuing their education.

While the Federal Supplemental Educational Opportunity Grant (FSEOG) is also a grant aimed at students with significant financial needs, it is typically awarded to students who already receive a Pell Grant and thus serves as an additional source of financial support. The key distinction here is that the FSEOG offers smaller amounts, and students must meet additional criteria, making it less universally applicable than the Pell Grant.

State grants also typically cater to financial need but can vary significantly by state in terms of requirements, availability, and repayment obligations. National Merit Grants are generally awarded based on academic achievement rather than financial need. Therefore, the Pell Grant is the most recognized and broadly applicable option for students needing financial assistance without the burden of repayment.