Oftentimes, students get confused when both student loans and scholarships are mentioned. But worry no more because, in this article, we will delve deep into the difference between a student loan and a scholarship. Now, let’s get into it.
What is a student loan?
A student loan is a type of loan given to students to finance their higher education and payback after completion of their course of study in tertiary institutions especially universities. Student loans mostly cover tuition, school supplies like books, lodging fees, and food expenses while attending school or university. This type of loan is paid back to the loan provider once the student completes his or her course of study as stated in the 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”.
What is a scholarship?
A scholarship is sort of a gift from the scholarship provider to students who meet the standards or criteria of the scholarship scheme. The standards or criteria are mostly based on students’ intelligence, needs, academic excellence, athletic prowess, and leadership potential. Once students meet any of these standards, they are awarded scholarships.
One of the popular scholarships out there is academic scholarship. With this type of scholarship, students qualify once they fall in the category of brilliance and display of academic excellence. To qualify for this type of scholarship, the provider would have to access the academic performance of the student before granting it to him or her to fund his or her education.
Other scholarship types include athletic scholarships, community service scholarships, employer scholarships, and need-based scholarships.
Just like student loans, the scholarship provider will coordinate with your school or university’s financial department to fund your education. The 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.
Conclusion: How Is a Student Loan Different From a Scholarship?
In simple put, you pay back a student loan while scholarship is free. Student loans and scholarships are both financial aid programs students can apply for to fund their educational needs, from tuition fees to school supplies. Understanding the two and their terms of conditions would help you decide which one is best for you as a student.