college grants vs. loans

College Grants vs. Scholarships vs. Loans: What’s the Difference?

No matter where you are in life, the thought of attending college can be intimidating. Whether you have never been to college, are making a career change, or are going back for a second degree, the costs of tuition alone might be enough to set you back on your goals. How can you earn a degree, without piling up student debt?

There are many different types of financial aid available for prospective students today. Common paths include student loans, scholarships, and college grants. Student loans you may have heard of – and you may want to avoid. Scholarships and grants, meanwhile, may be more attractive options for you.

Below, we breakdown the differences between grants vs. scholarships vs. loans, and which financial aid you may be eligible for at Goodwin University.

What is a College Grant?

A college grant is a form of aide that is granted, or gifted, to students based on their financial needs. Grants are designed to help with tuition, and typically do not need to be paid back.

There are different sources of college grants, including the federal government, state governments, colleges and universities, and organizations. The amount granted depends on each student’s expected financial privations and the costs of attending school.

What is a Scholarship?

A scholarship is a type of merit-based financial aid, typically awarded to students that meet (or exceed) certain standards set forth by the scholarship provider. For example, scholarships are often awarded for great academic and athletic achievements. In addition, scholarships may be available to those with certain traits or interests—such as if you come from a military family, or if your background is Latinx.

Scholarships are awarded to help students pay for their tuition and school-related costs. There are “full scholarships,” offering a full ride to college, as well as smaller scholarships consisting of several hundred or thousand dollars. Scholarships do not need to be paid back.

What is a Student Loan?

A student loan is a type of financial aid that is borrowed from the government or a private entity, to help pay for education and related costs. Student loans may be put towards tuition, books, supplies, room and board, and other fees. All student loans must be repaid, along with any interest that accrues over time.

What is the Difference Between a Scholarship and Grant?

Scholarships and grants are often confused. Both types of financial aid offer college funding that does not need to be repaid. However, there are a few key differences between scholarships vs. grants.

Scholarships are typically merit-based, meaning they are awarded to students with specific interests or achievements. Grants, on the other hand, are need-based, meaning they are granted based on a student’s or family’s financial situation. Pell Grants are a great example of this – these are federal grants offered to low-income, undergraduate students.

Scholarships and grants usually come from different sources, as well. As noted above, college grants typically come from a government body, or by the college or university. Scholarships, on the other hand, are most often awarded by private providers, including foundations, religious institutions, employers, and non-profit organizations.

Finally, it is worth noting that in rare circumstances, grants may need to be repaid. This differs from scholarships, which never need to be paid back. Depending on the college grant, a portion may need to be repaid IF you withdraw from school before finishing an enrollment period (i.e. semester) OR fail to meet any set obligations (such as the teaching service agreement required of the TEACH Grant).

What is the Difference Between Grants or Scholarships, and Loans?

The primary difference between student loans and grants or scholarships, is the repayment factor. Student loans always need to be paid back, while scholarships and grants do not. Scholarships and grants are sources of free money that can be used for a college education. Student loans are a type of borrowed money, that must be paid back to the government, bank, or loaning organization.

In rare cases, student loans may be forgiven. Getting a loan forgiven involves a long list of requirements to meet. As of May 2020, only about 1% of applications for student loan forgiveness were approved.

Grants vs. Scholarships vs. Loans: How to Apply

Now that you understand the differences between the types of financial aid, you may be wondering: “Where do I start?” How do you know which you’re eligible for, and how can you apply? Let’s dig in.

The best place to start in your search for financial aid is your college or university. During the admissions process, be sure to get in touch with a financial aid advisor who can talk to you about your options, and which financial aid you may be eligible for. At Goodwin, all prospective students meet with a financial aid advisor to design a personalized financial aid package that meets their needs best. This package may involve scholarships, grants, loans, work study opportunities, or a combination of the above.

Once you meet with a dedicated advisor, you can begin applying for financial aid. Your advisor will help with this entire process, but here are some basic guidelines on the application process:

  • Grants: To find out if you are eligible for grants, you will start by filling out the Free Applicant for Federal Student Aid (FAFSA). This will determine your Expected Family Contribution (EFC), and will determine your need for federal financial assistance. For state- or college-based grants, you can simply speak with your financial aid advisor about eligibility and potential options.
  • Scholarships: While you may only hear about star athletes getting presented with scholarships, know that you may also be eligible. All you need to do is a little research. Think about what makes you unique, what makes you stand out, as a student. Then, conduct a free scholarship search online to see what awards you are eligible for. You may also chat with your financial advisor about local scholarship opportunities.
  • Loans: Similar to grants, loan applications will begin with your FAFSA application. This will determine your eligibility and specific financial needs based on income and tuition costs. Learn more here.

College is More Affordable Than You Might Think

Your college education is in reach. Due to the accessibility of financial aid today, and the various types of financial aid available, you can advance towards your professional goals without worrying about how you’ll pay for class.

To put this into perspective, 92 percent of Goodwin students received financial aid in the Fall of 2019. More than half of these students received Pell Grants, which don’t need to be repaid. In that semester alone, almost $5 million was awarded in institutional scholarships.

Goodwin University offers one of the lowest tuition costs for private, non-profit colleges in Connecticut. We are committed to helping you acheive your educational dreams, and making it affordable. From filling out your FAFSA, to designing a personalized financial aid plan, we are here for you. Learn more by visiting us online, or calling our admissions team at 800-889-3282 today.