How do Grants, Loans, and Scholarships Differ?
If you’re ready for college, you are now ready to proceed to the next step: finding the best options to finance your education. There’s no other way to put it: higher education is indeed an expensive undertaking!
Even high earners and high-income families struggle to pay the education charges in 60% of colleges in America, says the Higher Education Policy.
How to finance your education is the biggest question posed by most students in the United States. Taking advantage of and exploring the different options for financial aid and education assistance programs is extremely important for you to be ready financially.
Fortunately, you will have access to apply to grants, loans, and scholarships. But before you fill out anything yet, educate yourself about what they are exactly, and the differences between them.
Simply put, grants are free money awarded by the federal government, local state government, or other institutions. With free money, it means you do not need to repay anything at all. The basis used for this type of financial aid is either merit or financial needs. You may take your chances with it by filling out your FAFSA sheet first.
There are many grants that you can be eligible for, but the most common one is the Federal Pell Grant. It is need-based, which means new college students planning to pursue undergraduate studies are qualified.
Another one of its kind is the TEACH Grant, which is specifically awarded to applicants who are planning to pursue Education programs. Another popular grant is called the Iraq and Afghanistan Service Grants awarded to children of soldiers or military staff who served in Iraq and Afghanistan after 9/11.
Perhaps the only downside is that these aids only provide limited resources, which means not everyone who deserves it may be picked. Their biggest advantage, on the other hand, is that financial aid is that they are need-based, and the money is given out for free.
Another viable option for you to finance your college education is by availing a student loan. You have to dive deeper into its definition, though, as it seems to be more complex than it sounds!
Loans, in their original meaning, would require borrowers to pay back the money borrowed from an institution, government, or private organization. Loans differ in the college expenses covered, which may include any or all of the tuition, living expenses, and other fees.
Consider the interest you will incur when you take out the student loan. Because some interests add up before you are capable of paying, be careful about making that choice.
Federal need-based, federal non-need-based, and state loans are your best options as they usually come with fixed interest rates. They also have less stringent rules than private loan companies and offer convenient repayment plans.
One thing to make sure of is that, before you decide on your loan of choice, assess your capability to pay! Can you handle the pressure of repaying everything after or within your college years? Balancing out the advantages and disadvantages of this type of aid is fair game.
Remember that loans expect you to pay your tuition back within a deadline. You could get a bad credit score in the future if you ever fail to pay on time.
Scholarships are offered from a wide variety of sources. This category of educational aid can be provided by a college or university, nonprofit organizations, private companies and businesses, and even communities. It depends on where you apply and which scholarship program you can be eligible for.
Scholarships are awarded free of charge and do not need to be repaid. In this sense, they are similar to grants. However, while grants are usually need-based, scholarships are merit-based.
Depending on the program, you may either have to meet the criteria or have the required skills. Are you a part of the minority? Do you excel in sports or possess exceptional talent? Are you active in community service? These attributes can qualify you for college scholarships.
If you demonstrate stellar student performance, you may also be qualified for awards and benefits from sponsors.
There are numerous scholarships out there that you can surely be a candidate for. Yet, you have to be aware that these programs include competitions and rivalries with other qualified applicants, and your eligibility and chances of getting picked aren’t guaranteed.
Scholarships aren’t limited in terms of the total amount that you will receive. Usually, they are flexible and allow students to apply as many times as they want. The downside? Scholarship processes are usually time-consuming, and competition with other well-qualified and high-achieving applicants is usually tough!