Loans, Scholarships & Grants for College
What are the differences?
Along with family savings, loans, scholarships and grants will almost certainly be the three leading methods for funding your college education. But how are they different?
Scholarships are a form of financial aid that do not have to be repaid. Scholarships for college are granted based on a variety of criteria, ranging from academic or athletic merit to financial need. Some are even awarded based on competitive essays or ethnicity.
Grants are monetary awards which, like scholarships, do not need to be repaid. Grants are funded by the federal and state governments as well as many schools that have their own money to award. Students should seek them out, since they amount to free money.
Finally, loans are borrowed funds which you, or your parents or guardians, are obligated to pay back over a certain agreed-upon period, with interest. They can be borrowed either from the federal government or from private sources such as banks or credit unions. Federal student loans, such as the Federal Direct Stafford Loan, generally come with more attractive interest rates and should be exhausted first. However, most students will still need additional funding after maximizing grants, scholarships, and federal loans—this is where private student loans come in.