Both student loans and scholarships are forms of financial aid that a provider grants you based on several factors. The main difference between student loans and scholarships is the fact that you must pay back the money you get from student loans.
Student loans are loans, meaning you borrow a certain amount of money from a lender to finance your education. Meanwhile, a scholarship is an award for academic excellence or other achievements, meaning your scholarship provider pays for your education without needing you to pay them back.
When you are looking into your options for financial aid, you might look for a student loan or scholarship program. Let’s explore how these options differ from each other.
Here is an overview of both types of financial aid. We discuss what they are, how to qualify for each one, and how you get money from each method.
A student loan is a type of loan you can get as a student to pay for your education. Student loans can cover tuition, school supplies like books, lodging fees, and food expenses while attending school or university. Since this is a loan, you must pay back the amount of money you receive from your loan provider according to your student loan policy and contract.
Qualifying for a student loan usually depends on financial needs and specific eligibility criteria. If you demonstrate financial need, meaning your income may be insufficient to fund your education, you may qualify for a student loan. This is usually the case with federal student loans. For private student loans, specific eligibility criteria may include a good credit history to ensure you can fulfill your student loan repayment duties.
You get money from student loans through your student loan provider. Your student loan provider may be the federal government or a private lender, and these entities coordinate with your school or university’s financial department to pay off your educational fees. Usually, your student loans pay for your school fees on a semestral basis, although your school’s financial department may disburse leftover money for other expenses while you study.
A scholarship is a prize you earn from a scholarship provider when you meet their specific standards. Scholarship providers grant scholarships to students who display certain attributes, including academic excellence, athletic prowess, and leadership potential. The kind of scholarship you can get depends on a scholarship provider’s values.
The most popular type of scholarship you can get as a student is an academic scholarship. This type of scholarship requires academic excellence to qualify. A scholarship provider would assess your academic performance before granting financial aid to fund your education. Other scholarship types include athletic scholarships, community service scholarships, employer scholarships, and need-based scholarships.
Like student loans, you would get your scholarship money from your scholarship provider. They will coordinate with your school or university’s financial department to fund your education. Your scholarship can pay for the same things a loan can, including tuition and accommodation fees. The main difference is that scholarship money is an award, meaning you don’t have to pay them back at any time ever.
A student loan is something you pay back, unlike a scholarship which is something you earn. Both student loans and scholarships are financial aid programs you can apply for as a student to fund your educational needs, from tuition fees to school supplies. You must understand the difference between the two to understand which program is best for your situation to pay for your education.