Students can apply for multiple types of financial aid, with the main categories being loans, scholarships and grants. The terms are sometimes used interchangeably, and while all three provide money, the eligibility requirements and payment plans are completely different.
Student loans provide the most money, but you are required to pay the entirety of the loan back, with interest.
The process for getting a student loan is tricky as well, as most students have a limited credit score, meaning they struggle to get favorable rates. It is not uncommon for students to spend five or 10 years after graduating paying off their student loans.
Scholarships and grants do not need to be paid back, but have different eligibility requirements. Scholarships are based on merit, while educational grants are primarily needs based.
In some cases, scholarships also have needs based requirements, with some grants also having limited merit requirements, such as maintaining a set GPA.
Educational grants are meant for lower-income students, who have limited family contribution or other outside assistance.
Another difference between the two types of financial aid is educational grants are not as competitive as scholarships. Many scholarships have limited funding, so they can only go out to a handful of students. In comparison, most educational grants are funded by the government and are meant for larger groups of students.
Scholarships often have limitations on what students can spend the money on, such as only buying school supplies or paying for the classes. Educational grants rarely have restrictions, which makes it easier to combine with other types of financial assistance.
In general, educational grants are also more compatible than scholarships. Grants are also accepted by most schools, while scholarships are often limited to select institutions, or require you to pursue a certain degree.