This year, about 20 million students enrolled in the American higher education system. And the majority of them face annual fees that average roughly $26,000 for in-state public universities and up to quadruple that for private schools.
Tuition, books, supplies, lodging and board, fees, and transportation may all add to the final price, which might be shocking when you see it for the first time. However, this does not imply that you must pay money to enroll. There are many options for assisting with education costs. But what exactly is the distinction between grants, scholarships, and loans? Here’s what you should know.
Scholarships vs. Student Loans
The main distinction between student loans and scholarships is that loans do not lessen the expense of education; rather, they help you finance it up front. They must be repaid at some point. Scholarships, on the other hand, are need-based or merit-based prizes that assist make college more accessible by going straight toward the cost of your education and do not need repayment. There are a number of significant distinctions between the two.
Getting the Money Scholarships are often paid directly from or to the institution.
When you take out a student loan, the entire money is divided by semester or year and is usually given to your school to pay your tuition.
The remaining funds are often transferred directly to you in order to pay expenditures such as off-campus accommodation, meals, and school supplies.
Scholarships, on the other hand, are often paid directly from the institution or, in the case of third-party awards, directly to the college. Your scholarship money may be applied immediately to your tuition or other school costs, or it may be delivered straight to you (depending on the scholarship).
Qualifications and Restrictions
Scholarships and student loans both have conditions connected to them. Scholarships, whether merit-based or need-based, may include GPA or other academic qualifying criteria. Scholarships are available from the government, your school, or a variety of private groups. (Here’s a massive scholarship database to help you in your search.)
Even if you get a more lenient scholarship, it is not a green light for a free for all. Because how you spend your scholarship money might influence anything from your taxes to your loan eligibility (see a tax specialist if you have any doubts about this), it’s critical that scholarships be only used for tuition or other school-related costs.
The process begins with an FAFSA®, whether the student or the parents apply for federal loans (Free Application for Federal Student Aid). Even if you don’t believe you’ll qualify for a student loan or other financial assistance, filling out the FAFSA is still a good idea since some states and institutions use it to calculate their rewards as well.
Minimum eligibility requirements for federal student funding include (but are not limited to) U.S. citizenship or eligible noncitizenship, a high school diploma or GED, and admission into a qualified degree or certificate program.
Aside from that, the FAFSA analyzes eligibility based on your financial position, the institution you want to attend, and other considerations. Student loans are often utilized to assist with the cost of attending college. In reality, Americans are presently saddled with a $1.5 trillion student loan debt (with a T).
What Is the Difference Between Grants and Scholarships?
Grants, like scholarships, can decrease the expense of higher education for individual students since they do not have to be returned. They also have minimal standards for continuing to be eligible. The fundamental distinction between the two is that grants are usually based on need, while scholarships are usually based on merit.
The Pell Grant program is the federal government’s biggest grant provider, awarding a variable maximum (currently $6,095 for the 2018–19 award year) every year depending on your financial conditions. Grants may also be provided by state governments to people who attend in-state schools or universities.
Is it possible to get a scholarship while also taking out a loan?
The amount of money you get from the grant or scholarship may have an impact on your loan eligibility.
You may still apply for student loans if you have been given a grant or a scholarship. However, the money you get from that grant or scholarship might have a significant impact on your loan eligibility.
The schools or programs you applied to, for example, will utilize your completed FAFSA to evaluate your financial need, which is the gap between your total Cost of Attendance (COA) and your Expected Family Contribution (EFC). Earning scholarships may lower your expenses, making you eligible for less financial help, including both need-based and non-need-based aid.
To make matters more complicated, some scholarships are awarded “first-dollar,” which means they are made either according to set guidelines or without regard for any other aid you receive, whereas others are awarded “last-dollar,” which means they cover any remaining gaps after all of your other aid has been applied. If you are given many types of student assistance, be sure to complete the total math to decide which is the better option.
A Few Words about Work-Study
Another option for some students is to use the Federal Work-Study program, which offers students with part-time employment while they are enrolled in school. It is open to students at all levels of higher education and seeks to place them in community service or jobs linked to their degree.
For students whose chosen career paths include a lot of hands-on labor, this might be an appealing alternative to not only help earn money for school, but also obtain real-world experience. Check with your school’s financial aid office to determine whether they are a member of the program.