Scholarships for StudentsBusiness & Students Loans

How is a Student Loan Different From a Scholarship?

Scholarships, grants, and loans are some of the available options to help students finance their college or university education. 

Differentiating these terms and knowing how to access and apply for them can be overwhelming.

This is why we have this page created to guide your applications. We’ll be covering:

  • How to qualify for a grant vs. a scholarship.
  • How to apply for student loans vs. scholarships
  • The difference between scholarships, grants, and loans

In the end, we’ll guide you on the best way to put them all together so you can have the most money for your education expenses plus a good credit score history.

Let’s get started with the basics – scholarships, grants, and loans.

What is a Student Scholarship?

A scholarship is a money-based award given to qualified students to help fund their education-related expenses such as tuition fees and miscellaneous expenses.

To be eligible, students must meet the scholarship’s qualifications as awards can be based on merit, talent, or academic performances in high school.

Various scholarship programs come in different requirements, and amounts vary depending on the type of scholarship and the foundation granting it. A typical scholarship often covers the cost of a single class or the entire college education. Scholarship opportunities can be from schools, private businesses, foundations, and nonprofit organizations.

What is a Student grant?

Grants are a kind of gift-aided award given to students on the basis of financial needs. Grants can be from the state government, federal government, non-profit organizations, or schools.

What is a Student loan?

A loan is money you borrow to finance your education through college or university. It comes with the expectation that you will pay back within a deadline laid out by your lender.

There are various sources to get student loans. 

  • It can be federal student loans, issued by the government,
  • private student loans, which are issued by non-government entities like banks and credit unions. 

Private student loans often require that you demonstrate the ability to pay back before the deadline. Paying back loans before deadlines is important as it will have an effect on your credit score.

One term you might want to know when it comes to student loans is… Loan Acceleration!

What is Loan Acceleration?

A loan acceleration is a demand for the immediate repayment of your entire federal student loan. This demand often comes in form of a letter to the borrower.

Main Differences Between Scholarships, Grants, and Loans


While scholarships and grants do not need to be paid back, loans come with an expectation that you will pay the money back. The money you receive through scholarships belongs to you.


Another difference is in the eligibility for these three sources of education financing. Each scholarship program through different foundations has its own eligibility requirements. While some are merit-based and awarded to those who demonstrate academic ability or talent, others are based on financial need or geared toward specific career goals.

There are even scholarships for adopted students, left-handed students, and physically challenged students.

What is the Difference Between Grants and Scholarships?

If both grants and scholarships are your money and no need for you to pay back, what then is the difference? 

Well, while grants and scholarships do not need to be repaid, the only difference is that grants are typically based on financial need and not on merit or performance as the case with scholarships.

To obtain a grant, you must demonstrate and present evidence of financial needs.

How do Loans Differ from Grants and Scholarships?

Accessibility. Loans are more accessible than grants or scholarships.

Federal student loans are funded directly by the federal government. You’ll need to complete the Free Application for Federal Student Aid – or FAFSA. Students must meet the eligibility and financial need requirements.

On the other hand, private student loans require that you show your creditworthiness. This will reassure lenders that you have the capacity to repay back their money. Lenders use certain criteria such as income and credit history as a creditworthiness assurance signal.

Pros and Cons of Scholarships, Grants, and Loans

Pros and Cons of Students Scholarships

  • One of the pros of scholarships is that the money received belongs to you and there’s nothing to pay back. 
  • There are no limits to how many scholarships you can receive as a student. Therefore, you can possibly fund your entire college education through many scholarships.

Winning a scholarship is an accomplishment – a show of talent and excellence.

Cos of scholarships are:

  • The amount you receive can affect your financial aid package. The more scholarship you received the less your chances of qualifying for federal student loans.

Scholarships are highly competitive. The process of qualifying for a scholarship, although varies, the majority will require you to undergo essay writing, fill out application forms, and fulfilling other requirements. And this may take some time. 

Students applying for scholarships are encouraged to prioritize and invest their time wisely. Sometimes, too many people apply for scholarships that will only be given to a few selected students.

Pros and Cons of Students Grants

Pros of Grants 

  • You do not need to pay back grants.
  • The application process is usually simple and direct since eligibility is based on financial need alone.

Cons of Grants

Although, grants are free and you do not need to pay them back. But, there are exceptions to this. Federal student grants might require that you pay back all or part of the money you receive if you are already a recipient of grants or scholarships. This will reduce your overall need for financial aid. Students may also be required to pay back federal grant money if they drop out of school.

Pros and Cons of Students Loans

The Pros

Loans help you to build a good credit score and history. Good credit history will help you in the future when applying for credit cards and other types of loans such as car loans or a mortgage.

The Cons

A loan comes with an interest rate, which means you’re paying an extra amount from the main amount borrowed.

Student loans have lower interest rates compared to personal loans. CreditKarma recently reported that the average interest rate for private loans in the first quarter of 2018 was 10.22 per cent.

How to Apply for Scholarships, Grants, and Loans

How to apply for scholarships

The scholarship comes with varied requirements and each scholarship foundation has its own eligibility criteria that applicants must meet to qualify to become recipients.

A good place to start planning scholarships is from high school. You can contact your mentor or course advisor to guide you on national and local scholarships that are available to you. 

You can as well use search engines like Google to find information about the available scholarships you can apply for to pursue your academic goals through college or university.

World Scholarships forum is another place where you can find many online resources on college scholarships, grants, and loans.

Every scholarship is uniquely different, therefore when applying for one, make sure you follow directions and guidelines of submitting online applications carefully.

Where some scholarships may require that you submit a written essay along with your application, there are many out there prioritizing leadership skills over academic performance and vice versa.

Note, always apply early for scholarships. This way, you have plenty of time and avoid late-hour submission.

How to apply for Student grants

If you’re applying for the federal student grants, you’ll need to fill out and submit the Free Application for Federal Student Aid form, also known as FAFSA. No application fee is required and the processes are simple. All college students are encouraged to apply for the federal student grants, fill out the FAFSA form in order to determine their eligibility for financial aid.

The U.S. Department of Education has a helpful guide for filling out the FAFSA form, and other details on the information needed to complete the application.

To obtain a federal grant, you’ll have to provide personal financial information to complete your application.

How to apply for student loans

When applying for student loans, you can choose between federal vs private loans. 

Just as in the case of a federal student grant,  federal student loans also require students to fill out the FAFSA.

As a student, you are eligible to borrow up to a capped amount of federal aid each semester.

Sometimes students find the amount of financial aid provided as loans by the federal government short of their expenses. 

To bridge the gap, taking out a private student loan could be an option to cover costs.

If you’re applying for private student loans you’ll need a few things to get started:

  • Social Security number
  • estimated annual income
  • school name
  • amount you’d like to borrow

You can start a Private Student Loan Application right here!

How long does it take to get a student loan?

 Students loan applications can take around 1 to 3 weeks for a federal student loan, while a private student loan can take between 2 to 10 weeks to process. This period is from the time you submit your application to the period you receive the funds. Where there’s a delay, a private student loan can take two to three months.

Note: Private lenders have their own rules for approving student loan applications.

When to Apply for Scholarships, Grants, and Loans

Scholarships, grants, and loans are for you to complete your college education. Students combine them to ensure all their expenses are covered and only focus on their studies. If you plan to get federal scholarships, grants, and loans, the first thing is to complete the FAFSA.

You’ll also want to search for private scholarships and grants and apply for as many as you can find. Scholarship, grants, and loans by the private organizations and schools are always open once every year and my advice is to search to know when anyone is open and apply.

Oladoyin Falana

Oladoyin Falana, a graduate of OAU, is an SEO Specialist, and IT business developer. He is the owner and content editor of, a platform that focuses on providing information on career, recruitment updates, exams, and admission updates, including general (How-to) information.
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