How do I raise money for a group engineering project in college?

sponsorship. See if any local materials companies or engineering companies are willing to put some money forward in exchange for advertising space on your boat etc.

Most universities manage to get either free or heavily discounted components too.

As far as i know there aren't usually grants in place, because the competition holders want the engineers to take the initiative and get experience in business as well as engineering.

Start within your college, look to the student chapters of professional engineering organizations (IEEE, groups like that). Also, does your college have a Student Engineers Council, or some similar council? They often award grants.

Then check local industry, especially those which manufacture what you need, you may be able to get the materials needed at a discount or free, with the possible catch being that the companies want recognition as sponsors.

Also, contact the dean of your college. You can't be the first group to ever seek something of this sort, I'm sure they would have some useful information for you.

They drew information from anyone who had nothing to do with the Bush administration.