To assess this, lenders look at criteria like income and credit history. Your creditworthiness is what reassures lenders that you can repay what you borrow. Since federal student loans are made and funded directly by the federal government, to obtain a federal student loan, you’ll need to complete the Free Application for Federal Student Aid – or FAFSA – and meet the eligibility and financial need requirements.įor a private student loan, you’ll need to prove your creditworthiness. Loan money tends to be more accessible than grant and scholarship money. How do loans differ from grants and scholarships? To obtain a grant, you’ll have to provide information about your financial circumstances to demonstrate that need. Grants are similar to scholarships in that they do not need to be repaid, but they differ in that they are typically based on financial need – not on merit or performance. Some scholarships are merit-based and awarded to those who demonstrate academic ability or talent, while others are based on financial need or geared toward specific career goals. EligibilityĮligibility for scholarships is based on the specific scholarship program. That depends – another major difference between scholarships, grants, and loans is how your eligibility for each is determined. You’re probably thinking, “Great! How do I get the money I can keep?” Scholarships and grants, on the other hand, do not need to be paid back. When you take out a loan, the expectation is that you will pay the money back. Primary Differences Between Scholarships, Grants, and Loans Repayment To qualify for a private student loan, you’ll need to demonstrate your ability to pay the loan back, usually with a cosigner. Students can borrow money through federal student loans, which are issued by the government, or private student loans, which are issued by non-government entitles like banks and credit unions. What is a loan?Ī loan is money that you borrow with the expectation that you will pay it back, within a deadline laid out by your lender. They typically come from the state government, federal government, non-profit organizations, and schools. Grants are gift aid awarded to students often based on financial need. Scholarships are also available through a wide variety of sources, including schools, private businesses, foundations, and nonprofit organizations. They come in a variety of amounts, but the typical scholarship award is $9,520 per undergraduate student as of 2018-2019 and can cover the cost of a single class or your entire college education. Qualification for scholarships depends on the individual scholarship program and awards can be based on merit, talent, or academic performance. What is a scholarship?Ī scholarship is a money-based award specifically designated for education-related expenses. Let’s get started with some basic definitions of scholarships, grants, and loans. scholarships?” Plus, we’ll show you how to apply for scholarships, grants, and loans as well as the best way to put them all together so you can save the most money. a scholarship?” and “How do you apply for student loans vs. To take some stress out of the process we’ll answer questions like, “How do you qualify for a grant vs. But figuring out how to access and combine them can be overwhelming. Scholarships, grants, and loans are some of the many options available to help you pay for your college education. What's the Difference Between Grants, Scholarships, and Loans?
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