You have probably heard of financial aid options “scholarships and education loan” during your student life. These are the ways to pursue your education without financial pressures. Students come across different financial aid options like scholarships and education loans, grants and bursaries as these are the primary means to help you pay for your education.
These are just some of the choices available for you to pay your college/university fee. Trying to choose from these options is difficult and mind-boggling. Scholarships, loans, and grants work differently and their implication set them apart. All of these financial aid options lend a hand to the students to pursue their education. But there are key differences between them that are important to consider before availing the option.
This article will guide you about both the ways of financial aid and help you make the best choice for your educational expenses. In addition, we will help you figure out how to save more money. Let’s have a look at the basic definitions of scholarships and education loan for better comprehension.
Scholarships are money-based awards intended to help students pay for their education expenses. Scholarships can either be awarded the student some cash or exempt their tuition fee so that they do not have to worry about paying the fees. Scholarships range from the cost of a single lecture to the tuition fees of the entire program.
Scholarships are hosted/funded by the institutes for their students or by private organizations, non-profit organizations, and charitable organizations. The criteria for every scholarship is different; the scholarship for every program is different. Candidates must meet the criteria to be considered formal scholarship and the best fit will be awarded.
To consider a scholarship, you must first build a strategy; check your grades, test scores, skills, and interests. Then you look for scholarships that are open and check their deadlines. Finally, after narrowing your options, you must check their eligibility criteria.
Qualifications for scholarships also differ for every program. Students must have the specific qualifications to be considered for a scholarship. Scholarships may also be awarded based on academic performance, extracurricular performance, talents, skills, social life and academic merit.
While applying for any scholarship, it is better to check the criteria, as not fulfilling it will automatically result in rejection of your application. Keep in mind that not meeting all application form requirements will reduce your chances of being selected. You may be the best fit for the scholarship with the required skills and knowledge, but if your application is missing the words that attract the readers, you may lose your scholarship to someone with a better application letter or essay.
Student loans are the most common type of financial aid for students. Students can register for loans to pay for their education. The student loan is the same as a usual bank loan; students borrow money from the bank to pay their fees. For a loan, students also have to meet the requirements or criteria. Those who fill the bank loan requirements are obliged to repay the loan in a specific period. Students must prove to the bank that they can repay the loan; this may require the student to co-sign the loan. Universities and banks associate together to help students who need financial support.
Difference between Scholarships and Education Loan
Distinguishing between scholarships and loans can be easy as scholarships are a gift to the students who perform well in their academic careers. While loans are no gift, you will have to repay the loan in a fixed period. Some scholarship programs can be strictly selective in their selection criteria. While loans can be received by any student regardless of their brilliant academic performance. There are numerous private and public scholarships that students can avail of all ages and programs.
The other crucial difference is that students can receive more than one scholarship at a time. It means, if you meet the eligibility criteria of more than one scholarship, you can apply for them and in case of being awarded, you can have both scholarships at a time. But this is not the case with loans; a student can only receive a loan from one bank at a time.
Student loans differ the most from any other type of financial service. Applying for it can be, to an extent, complicated. Therefore, it is extremely important to understand the application process of a loan and its requirements.
To understand the application process of loans, you must know the details of student loan. First, the types of loans; there are generally four types of student loans. You must know each type so that you can choose the right match for your financial status. Second, you need to dig deep into the details to know what type of loan will you and your family be able to repay each month; remember the interest amount as well.
Some of the states and banks have lowered the interest on students’ loans and several repayment options are available for the students. You can select your required amount of money and either pay each month or yearly.
Before you choose the financial support for your education, either scholarships or education loans, you must know the pros and cons of both of the services. You have to do proper research on scholarships and loans to get to the best option for yourself.
The pros and cons of loans and scholarships are briefly explained below.
Pros of Scholarship
- One of the best advantages of scholarships is that it is awarded to the students, which means they do not need to be repaid.
- A student can receive more than one scholarship at a time
- The financial supply will last through your entire educational degree
- Students who receive scholarships have higher chances of success for their future programs and careers
- Being awarded a scholarship is considered an achievement, especially if you received it based on your skill or talent
Cons of Scholarship
- Most scholarships are awarded on unique and strict merits, like academic performance, talent and GPA.
- Sometimes deserving students do not get the scholarship due to subjective criteria
- Some scholarship programs are highly selective, which makes it difficult for most of the students to apply.
- Students will receive scholarships in the areas that the institute demands. If your favorite course does not have a scholarship, you are not receiving any scholarship at all.
- There are different programs available for college students; if you meet the eligibility criteria, scholarships are an excellent choice.
- You will have to maintain your record to keep the scholarship throughout your degree.
- Any amount of scholarship you receive will be your financial aid package. It means, the more money you are awarded by scholarship, the less you are recognized for federal student loans.
Pros of Student Loans
- Repaying a loan helps the students build their credit. This will help you apply for your credit card, future mortgage, car loan etc.
- It is easier to apply for student loans.
- Loans provide more amount of money as compared to scholarship.
- The qualifications and requirements of student loans are not strict. You can easily qualify for a loan.
- Student loans are based on the student’s financial needs rather than their academic record and success.
- You will have the option of loans that will not require repaid until the end of graduation.
- The interest rate for a student loan is much lower as compared to usual loans.
- The loan can be used for other expenses as well.
Cons of Student Loans
- You will have to repay the loan.
- Repaying of the loan will have a specific period.
- Student loan has to be repaid with interest.
- There is a risk of unmanageable student loan debt.
- Not being able to pay the loan can damage your credit.
- Sometimes students face the need to do part-time jobs to repay the loan.
How to Apply for Scholarship
Your school and college is the best place to find scholarships. An advisor will be beneficial; you will know the national and local scholarships open for your degree program.
Students can find scholarships easily on opportunitiescircle.com. It is one of the best online platforms for students and has a large number of international scholarships programs for university students.
It is important to follow the requirements for each scholarship carefully. Some scholarships may require an essay along with the application form and some may require your passport, photos etc. Do not rush the application process. You can apply for scholarships on the university’s official website and easily submit your required documents there. You will have to wait for a response after the submission of your application.
How to Apply for Education Loans
To apply for an education loan, you will have the options of federal student loans and private loans. For federal loans, you will have to fill the FAFSA form.
Students are allowed to borrow up to a limited amount of aid for each semester. Federal loans are a help, but to some students, they may not suffice their financial requirements. To have enough help, students tend towards private loans to cover their needs. For private loans, you will need the following:
- Estimated annual income
- School/institute name
- The exact amount you want to borrow
Which Financial Aid to Consider?
Selecting financial support for your education can be a tough and challenging decision. First, considering the advantages and disadvantages of both scholarships and education loans, you can select an option that suits your financial status. After this, you must consider the criteria of financial support.
If your family is not stable enough to repay a loan, you have to do brilliantly in your academic career to be considered for a scholarship. However, getting a scholarship is not a piece of cake. Students apply every year for scholarships and wait to receive one. Keeping this in mind, most of the students go for loans. Remember, you can have a scholarship and apply for a loan. But for this, you will have to check the requirements of both. If, and only if you can pay back a loan, apply for one. Otherwise, a scholarship is the best option. Have patience after applying for scholarships.
Now that you have read about the financial supports you can get for your education; you can easily choose the best one. Both of these options are a great help to your financial requirement. You can discuss with your family members and professors the suitable option for you. Your high school seniors can also be a great help in guiding you.
You can apply for scholarships and education loan to increase the chances of getting financial coverage. But remember, you can not receive more than one loan. Even though loans are the most common type of financial aid, I consider scholarships a better option as they do not require repaid. Loans are easy to get, and scholarships have strict criteria, but I would prefer scholarships since debt is not my cup of tea.