Financial Aid for College
What are the differences between scholarships, loans and grants?
Along with family savings, loans, scholarships and grants will almost certainly be the three leading methods for funding your college education. Learn more about the differences between scholarships, grants and loans to determine the right combination for you.
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, including academic merit, athletic involvement, extracurricular activities, essays, ethnicity and financial need. You should be able to find scholarships on both a national and local level.
Grants are monetary awards which, like scholarships, do not need to be repaid. Grants are funded by federal and state governments, like the Federal Pell Grant, as well as many schools that have their own money to award. Unlike grants in graduate school, most grants for undergraduate students are need based rather than merit based. Competition will be tough, so apply early and to multiple grant programs to increase your chances of receiving these funds.
Finally, student 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, like Citizens Bank. Federal student loans, such as the Federal Direct Stafford Loan, do not examine your credit score and as such may offer better rates, but they are also for limited annual amounts, and should be exhausted first because of this. Most students will still need additional funding after maximizing grants, scholarships, and federal student loans — this is where private student loans come in.