If you’re thinking about going to college, then one of the most important questions you’re undoubtedly asking yourself is “how am I going to pay for it?” Though there are more affordable options when it comes to higher education, it’s safe to say that there are virtually no cheap options. If you’re not immensely wealthy, figuring out the financial side of things can be tricky. When researching what kinds of financial aid are available to help you with your schooling, you may have came across scholarships and student loans. However, how is a student loan different from a scholarship?

How Is a Student Loan Different From a Scholarship?

Financial aid is categorized into three main classifications: scholarships, student loans, and grants. In order to differentiate between each of these, it will be helpful to define each of them separately and give examples of how they work. It’s important to note that, depending on your circumstances and school choice, one of these methods may be able to suffice or all three may still leave you needing to come up with the leftover cost on your own. Though there are many options available to help you afford your education, there is no one-size-fits-all solution to the problem of tuition, fees, and books.

Student Loans

Student loans are simply another type of loan. That means that some financial institution must be willing to pay for a certain amount of your schooling expenses up front and you will be left with the responsibility of paying it all back once you’ve graduated or stopped going to school.

The interest level is often high, meaning that you’ll have to pay whatever institution is involved much more money than they originally gave you to go to school. Likewise, you’re usually granted a six month grace period following your departure from college; that means you won’t have to start paying on your loans until half a year later.


Scholarships are different beasts entirely. The money that comes with a scholarship doesn’t have to be repaid; whoever provides the scholarship is solely reliable for the funds they promise. Scholarships are usually awarded because of the scholar’s performance in a certain field of study or even in sports.

Usually scholarships come with certain stipulations, meaning that if you aren’t able to meet the requirements proposed, your scholarship could be revoked and you’ll be left paying for whatever tuition, fees, books, or other expenses for the rest of your collegiate career either from your own pocket or from loans and grants.


There is also a third option that exists when it comes to financial aid: grants. Grants are monies simply given to you for tuition, fees, books, and living expenses with little to no strings attached. Usually you have to meet a certain amount of hours in order to receive them (above half-time, meaning 6 or more credits per semester), but they never have to be paid back and they won’t be revoked should your grades plummet. The government issues grants based on income, but there are other institutions who will award them to scholars pursuing degrees in specific fields of study.

Different Kinds of Student Loans and Scholarships

Though the main thrust of “how is a student loan different from a scholarship?” has been answered, there’s certainly more to the story. Both scholarships and student loans are broad categories in and of themselves; there are quite a few different types of each available, although they may not all be accessible to any one individual.

Federal and Private Loans

There are several types of student loans, but the two main categories are private and federal. You can apply for a federal student loan through FAFSA, and in this case, it’s the government who’s paying your tuition, fees, and other expenses up front. However, a private student loan comes through a private lender or bank.

These often have additional stipulations, and the lender may not give you income tailored repayment options should you end up making less money annually than you originally believed at the time you started your education adventure. Any student loan has the potential to leave you critically in debt.

It’s also important to know that while both types of loans take your income into consideration, federal student loans are particularly income-based; how much you or your parents make annually could have a tremendous impact on how much money the government is willing to loan you for your collegiate experience.

Furthermore, there is a cap to how much money you can recieve through federal loans; if you’ve already worked through one degree, you will not only be unable to receive grants, but may have issues getting loans, too.

Academic and Sports Scholarships

If you’re getting ready to complete high school, one way to obtain a scholarship is through superior academic achievement. For instance, with a high GPA and superb ACT scores, you could end up getting a full-ride scholarship (meaning absolutely every expense associated with your schooling is paid for) from your state or another institution.

Likewise, if you excel in sports, certain colleges can provide you with a scholarship so you’ll come play for their team. Both academic and sports scholarships come in various stripes and colors; they can offer you a full-ride, or they can take you part of the way. Either one is great!

Scholarships Based on Demographics and Area of Study

Though your academic record will undoubtedly play a part in receiving one of these scholarships, you could be awarded a scholarship because you fit a certain demographic or are pursuing a degree in a specific area of study. For instance, many Native American tribes award scholarships to young members of their tribes who do well in school and who wish to pursue higher education.

Likewise, there are many scholarships specifically for African Americans and other minorities. Furthermore, scholarships exist for virtually every area of study; if you excel in your planned major, then you could be eligible!

How to Get a Student Loan or Scholarship

Now that we’ve got the answer to “how is a student loan different from a scholarship?” and seen the different kinds that exist for each, the next step in the process is learning how to go about obtaining one or both of them. There isn’t a universal answer to this, however: every loan or scholarship you apply to will have different requirements and methods of application. Still, this should give you a good idea of how to go about receiving these two forms of financial aid.

Applying for Student Loans

To get a federally funded student loan, the first thing you must do is create an account at FAFSA.com. From there, you’ll have to enter all of your personal information including your annual income (if you’re still a dependant then you must put your family’s instead).

You’ll need to have a list of the schools you wish to apply to on hand; the government sends the information and funds directly to them. Once you’ve gone through this process, FAFSA will let you know how much in grants and loans you’re eligible for. Once you’re enrolled in school, have gone through student loan entrance counseling, and have signed the master promissary note, your financial aid will be disbursed to cover your tuition and fees.

Anything extra will be refunded to you for living arrangements and other expenses related to your schooling. The process for this is very similar for a private loan; almost the same information will be required when applying on a lender’s website, and the rest of the process for how to recieve your funding is virtually the same.

Applying for Scholarships

In order to receive a scholarship, the first thing you’ll have to do is contact whoever is offering the scholarship. There are hundreds of different options online for you to search through. Sometimes those who provide the scholarship will approach you first (which is often the case with a sports scholarship and with some academic scholarships).Once you’ve applied and been selected for the scholarship, you’ll receive a list of requirements that must be met in order to receive and keep your scholarship. All information from that point forward will be provided for you from whatever institution is awarding you the scholarship.


So how is a student loan different from a scholarship? To put it simply, student loans must be repaid and scholarships do not. Scholarships are often awarded based on one’s performance in academics or sports, whereas student loans are offered even to those who may not be quite as talented in those areas. Furthermore, student loans may take income into consideration; while many scholarships may do the same, performance based scholarships often focus solely on the performance itself.

Now that you have the final answer to “how is a student loan different from a scholarship?” it’s time to make your decision on how to fund your collegiate journey and move forward into the world of higher education.

Featured Image by airpix from Flickr

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