Grants, Scholarships & Loans: What’s the Difference?

Grants, Scholarships & Loans: What’s the Difference?

Drexel University School of Education

Whether you ’ re attending college for the first time or are pursuing an boost degree, paying for tuition, supplies, and other costs associated with college can be a daunt process. fortunately, there are assorted forms of fiscal aid for higher education available to help make investing in your education financially feasible .

  • Grants and scholarships are free aid (otherwise known as “gift aid”), meaning they don’t need to be paid back, making them the most sought-after options. The main difference between a grant and a scholarship is where the funds come from, eligibility criteria, and the application process. In general, grants are given based on financial-need, while scholarships are merit-based and awarded to students based on their academic achievements, extracurricular activities, field of study, and more.
  • Loans are the more commonly-used type of financial assistance. The difference between loans and a grant or scholarship is that they’re not “free” and need to be repaid, with interest. However, they often have fewer requirements to qualify and are in greater supply, so they’re accessible to a broader range of people.

The follow will break down the differences between these types of fiscal aid to help you fund your educational pursuits .

Financial Aid Grants for College

As mentioned above, college grants are given to students who have a financial-need, with funds coming by and large from federal and state government. The needs to qualify for a grant can include but are not limited to :

  • family income and status
  • cost of the school
  • disability status

Some of the major, government-funded grants include the Teach Education Assistance for College and Higher department of education Grants ( TEACH ), Pell Grants, Federal Supplemental Educational Opportunity Grants ( FSEOG ), and Iraq and Afghanistan Service Grants. however, there are other options available depending on if you ’ re entering an undergraduate or graduate program, if you ’ ra obtaining finance for a inquiry project, or if you ’ re an international scholar.

The trace breaks down the pros and cons of college grants for fiscal aid :
Pros of College Grants
Cons of College Grants

Grants don’t need to be repaid, assuming the requirements are met (maintaining a certain GPA, completing the program, etc.). 
There are fewer grant options compared to scholarships because grants are mostly based on financial-need. 

It’s possible to get more than one grant based on your financial-need, field of study, and other qualifiers. 
There are limited funds to provide and grants can be highly competitive. 

Grants provide opportunities and funding for students from low-income families or communities to pursue higher education. 
Grants are often not enough to pay for all college expenses. 

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The application process for grants is simpler and more straightforward vs scholarships. 
There are often more restrictions with the funds coming from grants. 

Applying for grants starts with filling out the exempt Application for Federal Student Aid ( FAFSA ), which determines how a lot fiscal aid you need based on factors like your family income .
After filing a FAFSA, you ’ re mechanically considered for many of the major federal grants. Since it ’ s the first eligibility requirement for most grants, american samoa well as certain scholarships and loans, it ’ mho essential you fill out the FAFSA vitamin a soon as possible .
Learn more about grants available for students studying department of education, in both undergraduate and graduate programs at Drexel School of Education .

Scholarships for High School and College Students

Scholarships are another bang-up free source of money for college that are offered by many companies, schools, non-profits, and other organizations. The main deviation between a scholarship and a accord is that they ’ re based on more than just financial-need. There are respective types of scholarships awarded to students based on respective scenarios :

  • Academic excellence
  • Students studying an in-demand field
  • Exceptional athletic performance
  • Students of a specific ethnicity or group such as Native Americans or the LGBT community
  • Scholarship competitions

The options are bountiful, so it ’ randomness authoritative to do your research to see what might be applicable to you. Be certain to check out the available undergraduate scholarships and graduate scholarships offered by Drexel .
The follow breaks down the pros and cons of scholarships for fiscal aid :
Pros of College Scholarships
Cons of College Scholarships

Scholarships don’t need to be repaid, assuming the requirements are met (maintaining a certain GPA, completing the program, etc.). 
In some cases, deserving students aren’t rewarded scholarships because the criteria can be subjective. 

There are many more scholarships available vs grants. 
Since there are so many options and sources for scholarships vs grants, you’ll have to do more research and put in more time. 

Scholarships provide access to education to a larger number of students. 
The large amount of options also makes competition high for most scholarships. 

Scholarships look great on your resume when applying for jobs. 
There are often more conditions and requirements for maintaining the scholarship funds. 

When applying, the requirements and deadline count on the specific eruditeness. many require an try to be written, but it in truth can vary by type of eruditeness. Be sure to thoroughly read through the scholarship web site and application to ensure you ’ re fulfilling all the requirements. Some eruditeness deadlines are up to a year before you graduate, so it ’ second recommended to start doing your research preferably rather than late .
For high school students, make indisputable you communicate with your guidance counselor. They can point you in the correct commission and keep you on traverse. besides, it ’ second important to remember that your accumulative student aid can ’ metric ton be more than the total cost of the college. so, make sure you keep close track of the total sum of care you ’ re getting in all its forms .

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Student Loans by Type

After finding out what complimentary help you qualify for, student loans are the future tone. Loans are offered by the union government equally well as private institutions, and they ’ re the most common imprint of fiscal help for college.

union loans are more desirable because they have lower pastime rates, allow for flexibility with payments, and provide other benefits such as loan consolidation and submit payments. private loans, the more common type of scholar lend, are provided by banks, credit unions, and other private organizations. Since the terms and conditions are subject on the lender and not protected by the same laws federal loans are, individual loans typically have higher interest rates adenine well as less benefits and tractability .
The come breaks down the pros and cons of scholar loans for fiscal help :
Pros of Student Loans
Cons of Student Loans

Student loans are easier to get compared to grants and scholarships. 
Unlike grants and scholarships, student loans need to be repaid. 

Student loans often provide a larger amount of money compared to other financial aid options. 
Interest rates, especially with private loans, can make repaying the debt take a longer amount of time. 

The money from a student loan can be used on other expenses outside of tuition. 
Students will sometimes need to take on additional jobs during school to help cover the costs of a student loan if they’re due before graduation. 

Paying off student loans on time helps build and establish credit. 
Not paying off loans on time or defaulting will damage your credit. 

The pursuit are some common questions students have about loans :

When do I have to start making payments?

federal scholar loans aren ’ t ascribable until you graduate, leave educate, or change your condition to less than half-time. private scholar loans are frequently due while still in educate, but some lenders will let you defer payments until you graduate .

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Where can I find out how much I owe?

If you don ’ t know your scholar lend service provider, you can find your federal lend balances on NSLDS. For individual loans, you can check with your school ’ s fiscal aid office .

What is an income-driven repayment plan?

For federal scholar loans, income-driven repayment plans set your monthly payment based on your income and family size. You can fill out an application to be on this kind of plan if you qualify for federal student loans .

What is the best private student loan?

The “ best ” loanword option depends on what you ’ rhenium looking for, but the most popular lenders include Citizens Bank, College Ave, LendKey, Sallie Mae, and CommonBond. Regardless, it ’ sulfur always authoritative to look at consort interest rates and fees with any individual loanword .

What qualifies you for student loan forgiveness?

There are assorted reasons for scholar loanword forgiveness ( besides called cancellation or discharge, depending on the reason ), and it ’ s alone possible with union loans. Some common reasons include teaching in a low-income educate for five total years, your school closes while you ’ re enrolled or soon after, or if you work in some politics of non-profit jobs for ten total years and repay loans based on income .

What kinds of federal student loans are available?

subsidize federal loans are available to students who have a financial-need for the aid, which means the government will pay the interest while you ’ re in school and for a grace period after graduation. Unsubsidized loans are available to all students regardless of financial-need, but the student is creditworthy for all interest.

There are besides PLUS and Perkins loans. PLUS loans are offered to parents of dependant undergraduate students, equally well as graduate or master students. Perkins loans are for students with a meaning financial-need and are based on the school .

How can students apply for loans?

The process will vary depending on if it ’ s a federal or private scholar lend. For federal loans, the first step is submitting the FAFSA. once reviewed, the data is used to award fiscal aid depending on the financial-need. For secret loans, the serve can vary by lender. however, it normally involves providing them your fiscal data and selecting your desire pace and refund choice .
Learn more about applying for federal and secret loans, including what refund plans and interest rates are available and any differences for undergraduates and graduates .