Two popular ways to fund your college education expenses are grants and loans. They are both having big differences that you need to get acquainted with if you want to go through any of the two means to finance your college education. This article is to discuss the differences between grants and loans and the benefits of both of them.
Free money that can be awarded to students as a way of funding their education and are based on the meeting of certain criteria is known as grants. Some of the criteria include;
- Being accepted for enrollment into a school as an undergraduate.
- You are also expected to meet some financial qualifications and you will need to fill out a FAFSA form for that.
- You are expected to have a high school diploma or GED
- Being a US citizen or a non-citizen who meets requirements
- You also need to maintain a set GPA’s
- Not being in default on any loans at the time of accepting and using a grant.
The Pell Grant is one of the most popular grants for students. There are other educational grants which include;
- SMART Grant
- Academic Competitiveness Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
One of the interesting and captivating aspect of grants is that they do not have to be refunded, however, the student that qualifies and uses the grant is expected to maintain a certain grade point levels and also the student should not exceed some financial levels for the grant to be valid.
Sums of money you can borrow for the purposes of attending college is known as loans; but unlike grants, loans will need to be refunded back with interest. A student loan can be combined sometimes to make up the difference in what is not covered by a scholarship or grant, or some students find their financial needs have to entirely subsist on loan. To apply for a student loan, you will be required to fill out a FAFSA form. Both Federal and Private institutions can give loans to individuals who apply for them. The different types of loan structures available are listed below;
- Direct Subsidized Loans – With this loan structure, the government covers your interest while you are in school or in deferment.
- Direct Plus Loans – Loans structured for students from the US Department of Education.
- Direct Unsubsidized Loans – All interest accrued is the responsibility of the borrower and must be repaid.
- Direct Consolidation Loans – The combination of multiple Federal loans.
Grant Pros and Cons
Pro: Because grants are not expected to be refunded, it is most preferable. This means students do not have to worry about making payments like they would do if it were a loan which incurs interest.
Con: The grant money received might not necessarily cover for every expense you need it for
Con: It can be difficult to qualifyfor and secure a grant.
Loan Pros and Cons
PRO: You will have more flexibility and opportunity available because you have more freedom of choice in how you use your loan in school.
CON: You have to repay the loan, sometimes repayments begin even while you are still in school.
CON: You will most likely have to repay your loan with interest.
PRO: Loans are much easier to secure than grants are.
It is advisable to prepare to utilize the two means of getting funds for your college education. When properly used, they can both be helpful. More information should be given to you when you apply to a college and are accepted on funding and what types of grants and loans available through the school to help you out with your funding. If you need more information or guidance on what to choose and how to proceed with decisions on your funding, don’t hesitate to speak to a guidance counselor in connection with the school who can give you some direction and help out with your choices.