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Great Differences Between Student Loans, Grants, And Scholarships

Great Differences Between Student Loans, Grants, And Scholarships

The three most widely used forms of financial assistance are grants, scholarships, and student loans. Each of these financial aid choices caters to a distinct set of requirements and situations, so it’s important to know how they differ and overlap to make the best decision.

When considering their education expenses, students usually look to the main sources of funding:

  1. Student loans
  2. Grants
  3. Scholarship programs

Loans and scholarships are the two common funding sources used by students to pay for college. Scholarships are sums of money awarded to students based on particular qualities, like athletic or intellectual aptitude Scholarship funds are never required to be repaid. Loans are sums of money that parents or students borrow.

Scholarship awards are free money that you never have to pay back, unlike student loans that are typically repaid with interest by borrowers.

Differences Between Student Scholarships, Grants, And Loans

For you to invest in the concept of these distinctions, you need to boldly understand these three main statements about each of the above concepts, which are:

  • Scholarships are typically merit-based rewards given for superior performance in a particular subject or area of study.
  • Grants are given out based on need.
  • Student loans, you borrow money for school, which you must repay once you graduate.


Scholarships are typically awarded to improve particular fields of study, encourage academic performance, help exceptionally gifted individuals, increase opportunities for equality for youth, and support particular populations (often underprivileged).

Money is offered to students as scholarships to assist with the cost of their education. There is no requirement to repay this money.

Governmental bodies, non-profit organizations, universities, and institutions give them out. Thus, it makes sense that the most prestigious universities have the hardest scholarships to get.

They are a great option for kids because they can pay for their entire education. The intense competition for scholarships is a drawback.

Scholarships come in a variety of forms, such as talent-, field-, or merit-based ones. We have a comprehensive guide on the many types of scholarships that includes information on them.


How Scholarship Differs

1. Scholarships are comparable to grants in that they don’t need repayment, unlike student loans.

2. Though they can also be need-based or criterion-specific (i.e., certain scholarships are provided to students from specific nations or cultural backgrounds, restricted to a specific discipline, etc.), scholarships are typically given out based on an applicant’s accomplishments or talents.

3. Many scholarships include requirements. These could include doing community service hours, maintaining a specified GPA, or pledging to pursue further education in a particular subject after receiving the prize.

Each award has a different application procedure, but you can begin by completing the FAFSA, or Free Application for Federal Student Aid.

Usually, you’ll need this to apply for institutional, state, or federal scholarships. You might also need to submit supporting materials for some scholarships, like a CV, letter of recommendation, and essay.

You can search through more than 8,000 scholarships, grants, fellowships, and other rewards with the Labor Department’s Scholarships Search Tool. Private organizations may also offer scholarships; these don’t require the FAFSA. Use scholarship portals such as,, and to focus your search.

Applying for scholarships

Applications for scholarships might differ greatly depending on the organization’s selection standards. Essays, academic transcripts, letters of recommendation, evidence of financial need, and occasionally projects, resumes, or video essays may be required.

Scholarships with the highest value usually want the most materials, while those with the lowest reward amounts usually request less. It will take a while to put together many of these applications, so the earlier you begin, the better.

To stay on top of your application process, you can use our scholarship search engine to get personalized scholarship matches that are updated every day.

When you apply, colleges frequently immediately evaluate you for scholarships. For the largest award, it is advisable to apply as soon as feasible.


Like scholarships, grants are awards based on money. Usually, state governments, the federal government, nonprofits, or the universities themselves give them out.

They have no repayment requirements but are determined by financial need similar to scholarships. You will therefore probably need to submit the CSS Profile or the FAFSA to demonstrate your financial situation.

One well-known kind of grant that is exclusively available to undergraduate students who exhibit extreme financial need is the Pell Grant.

The amount you receive depends on a few factors, including your status (full or part-time), estimated family contribution, cost of attendance, and length of time you want to attend school. The maximum award for the 2023–2024 school year was $7,395.


How Grants Differs

1. In essence, grants are non-repayable. But if you don’t fulfill the requirements to be eligible for the money, they could become repayable. For instance, you decide not to graduate or you use the funds for non-eligible purposes.

2. Typically, governments, schools, colleges, or non-profits grant need-based or project-based help. Students from particular backgrounds or those in need of financial assistance are given these awards.

3. Grant recipients may be expected to fulfill specific requirements, such as filing regular research progress reports, to guarantee the money is being utilized for what it was intended for.

Applying for Grants

Grants are typically used to describe money for education that comes from the federal government, the state, or your particular institution. Usually, these funds are awarded solely based on financial need, which is determined by utilizing your FAFSA.

1. Federal and state grants: When you apply, your school will frequently automatically consider you for any grants federal or state. This covers numerous state grants as well as the Pell Grant; you might only need to submit the required application materials.

Make sure you familiarize yourself with any grants for which you could be eligible that call for a separate application. Additionally, keep in mind that grants typically support applications on a first-come, first-served basis, so you should submit your materials as soon as you can.

2. Institutional grants: Contacting your financial aid office is the best method to learn about any potential institutional awards. Find out from an officer there if your institution offers any awards for which you might qualify. After that, you can confirm that you have submitted applications for all of the grants for which you might be eligible.

Student Loan

Student loans are sums of money borrowed by students to pay for their educational costs, such as books, supplies, tuition, and other associated charges.

Both public and commercial organizations have the authority to grant student loans. Compared to private loan providers, public lenders typically have more accommodating repayment terms and cheaper interest rates. In addition to being a widely used kind of financial aid in the US, student loans are also widely utilized in the UK.

These monies require repayment over time, in contrast to grants and scholarships. While student loans from colleges might occasionally be granted with no interest, most student loans come with interest.

Like grants and scholarships, you must fulfill certain requirements to be eligible for a student loan:

1. Creditworthiness: A credit history check is performed on you or your parents.

2. Financial need: government loans give special weight to this factor.

3. Program type and length: Undergraduate, graduate, and professional training programs can all have an impact on the terms and quantities of loans.

Great Differences Between Student Loans, Grants, And Scholarships
Great Differences Between Student Loans, Grants, And Scholarships

How Student Loans Differs

1. Unlike grants and scholarships, student loans have an interest-bearing requirement.

2. Repayment plans can differ. Certain loans need to be repaid right once, while others have a grace period after graduation during which payments are due.

3. You may wind up with difficult financial problems due to accumulated interest if you apply for a loan without first knowing your interest rates and terms.

Applying for Student Loan

Depending on the kind of loan you’re asking for, applying for student loans can seem very different. It falls into two primary categories:

1. Federal loans: Just like with grants, the application process for federal student loans begins with completing the FAFSA. You will receive information about the loans you are eligible for in your financial aid award letter after submitting this to your schools.

This one application determines your eligibility for all federal loan programs and registers you for any need-based financial aid, including grants, work-study, and select scholarship programs.

You will then be able to choose which loans to approve or disapprove. Your eligibility for a certain amount will change depending on your year of college and your financial need.

2. Private loans: Lender-to-lender variations exist in the private lending process. The basic process is still the same: the lender will perform a credit check and you will provide information about yourself and any co-signers, if any.

After that, you’ll learn how much you can borrow, as well as the interest rate and terms of repayment for those loans. Searching the student loan industry extensively can help you identify the finest private loan choices.

Like a personal or auto loan, a complete underwriting procedure is necessary for private student loans. Banks, credit unions, internet businesses, and state-run organizations all provide them.

In contrast to federal loans, private loans take into account the borrower’s money and credit score; hence, the majority of students will require a co-signer.

Similarities between Scholarships, Grants, and Student Loan

1. Goal: The main goal of all three programs scholarships, grants, and student loans is to help students pay for their education so that their financial circumstances won’t prevent them from pursuing an education.

2. Strict application requirements: To be eligible, you must fulfill certain requirements, no matter the kind. As a student, you may find that applying for financial help is a laborious and comprehensive procedure.

How to decide what’s best among

The best forms of financial aid are grants and scholarships since they don’t require repayment. Since they might be difficult to repay after graduation, student loans should only be used as a last choice.

On the other hand, some students may find themselves in need of student loans. This typically occurs when an applicant is ineligible, has inadequate grades, or submits a weak application. Ensure that your application is flawless and that your chances of receiving one are increased.

Look around for the best terms and interest rates if you do need to take out student loans. A strategy for how you will pay back your loans after graduation should also be created.

Managing student loan debt

1. Include monthly student loan payments in your budget.

2. To ensure you never forget a payment, think about establishing automatic payments.

3. Get in touch with your lender to find out if you are eligible for a delay or forbearance if you are having problems paying your debt.

4. Examine your possibilities for refinancing or consolidating your student loans.

What would the payment amount for your student loans be?

Most federal student loans have repayment obligations that begin six months after graduation. For every kind of federal loan, Congress sets the interest rate once a year, which you will be locked in at the time of loan origination.

For the duration of your loan, that interest rate won’t change. For private student loans, interest is calculated differently.

While some lenders give all borrowers the same rate, others give each borrower a varied rate. In those situations, only people with good credit, or those whose co-signer has excellent credit, are eligible for the lowest interest rates.


In general, scholarships are awarded similarly to student loans. You’re not likely to ever see your scholarship money, unlike student loans, when the check is usually cut to you, the student.

Scholarships, grants, and student loans are all options for students who need help paying for college. Scholarships and grants are the best types of financial aid because they do not need to be repaid.

Student loans should be a last resort, but they can be a necessary option for some students. If you do need to take out student loans, be sure to shop around for the best interest rates and terms and make a plan for how you will repay your loans after graduation.

It’s common for students to combine all three approaches; this indicates that they have thought through all of their alternatives.

Please feel free to go through other items on our website, and speak with a representative from your chosen school’s financial aid office, your high school counselor, and other well-respected adults if you have any further questions.

I wish you well and please remember to apply for any scholarship for which you are qualified while they are still available!


What is the difference between a scholarship and an award?

What distinguishes a bursary, award, and scholarship? Academic merits, including reaching a particular grade point average (GPA), are taken into consideration when awarding scholarships.

Financial need is the basis for awarding bursaries. Awards are given out according to some factors, such as leadership and community service.

Are scholarships limited and there often aren’t enough to go around?

Yes! There is a cap on the number of scholarships given out because of the money available. However, the claim that there aren’t enough scholarships available for everyone is untrue. You can apply for a wide range of scholarships at various levels.

What do you call someone who wins a scholarship?

There are multiple methods for reaching out to a student who has won a scholarship. They may be referred to as direct scholars, student scholars, honor students, or scholarship students.

What does an awarded scholarship mean?

It means a sum of money provided by a college, university, school, or other organization to help a person with exceptional aptitude but little financial resources with their studies: He was awarded a Harvard scholarship.

What is the award amount for the most valuable student scholarship?

Traditionally, the 20 Top Finalists take part in a paid Leadership Weekend in Chicago when they interview with the national judges. These 20 finalists will compete for two $50,000 first-place prizes, two $40,000 second-place prizes, and two $30,000 third-place prizes.

Imran Lawan

I am a professional researcher whose focus is around engaging and knowledgeable information for students.

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