Joining a college or university to pursue a degree is a huge deal. Statistics show that in spring 2023, roughly 16.9 million students in the United States were enrolled in different degree-granting universities and colleges nationwide. Pursuing higher education improves your earning potential in the future, not to mention enabling you to learn vital hard and soft skills, including adaptability.
However, what happens when you can’t raise enough funds to cover your college expenses? Let’s face it—paying for tuition, housing, transportation, food, stationery, and other essentials can be overwhelming. Chances are, you’ll find yourself digging into how to borrow money to invest in your education.
Some of your top options when you need money to fund your further education are student grants or loans. Which is the best choice? In this blog, we’ll provide a comprehensive grants and loans comparison to help you decide. Read on to learn everything about these popular sources of financing for university and college students.
Everything You Should Know About Grants
What Are Grants?
Grants are sources of funds for students enrolling in colleges and universities. They can be provided by:
- The federal government
- A state government
- Colleges and universities
- Private companies
- Non-governmental organizations
One of the primary reasons you should seek a grant is that you don’t need to repay it. This is the main difference between grants and loans. So, you can think of grants as a gift to help you pursue further education.
Also, grant programs vary, depending on whether they’re meant for students attending career schools, colleges, universities, or community colleges. The financial support you receive will also depend on the institution you attend.
At the same time, your undergraduate program may affect the type of grant you’re eligible for. Some organizations provide monetary support only for students pursuing a specific career or project. Therefore, you’ll only receive the funding if you’re in the pool of learners they support.
Again, grant providers consider a student’s financial background when deciding whether to award them the funds. Students from low-income families have higher chances of scoring financial aid.
How to Apply for Grants
The first step to applying for a grant is finding a program you’re eligible for. This lets you know your chances of getting the monetary support and the package you’ll likely receive.
After finding the perfect grant program, follow these steps:
- Fill out the Free Application for Federal Student Aid (FAFSA) form. Counter-check all the details, including your parent’s information, to ensure accuracy.
- Submit the FAFSA form within the specified deadline. You can do this online or complete the PDF, print it out, and mail it for processing.
- Explore your financial aid offers. After submitting your FAFSA form, you’ll likely receive offers from universities and colleges ready to welcome you. Take your time to go through them to decide what’s best for you. At the same time, these offers may explain other forms of financial aid you can consider. Don’t hesitate to apply for them if you deem them ideal.
What If You Don’t Get the Grant?
There’s no guarantee that you will be awarded the grant you apply for. So, what happens when you miss out? Ask for feedback from the grant provider to understand why you didn’t cut. This could enable you to complete your grant applications in the future.
Also, you should keep pursuing your dreams even if you don’t get the grant. Explore other funding options – including loans – and stay positive. Suppose you feel you might qualify for the same grant after talking to the grantmaker; you can apply for it the following year.
Keep in mind that sometimes your grant application may be approved, but you’ll receive less than the financial aid you applied for. This could happen for various reasons, including that your financial situation has improved since you submitted your FAFSA form. You might also get less money than anticipated if you don’t meet all the eligibility requirements.
Regardless of the verdict, make all efforts to pursue your tertiary education.
Advantages of Grants
Should you get a grant award, these are the benefits you’ll enjoy:
- They are non-repayable.
- They improve your credibility and resume.
- There are many types of grants you can apply for.
- They help solve your financial problems so you can concentrate on your studies.
- They could help you land an internship or job after graduation.
- Some grants require you to participate in events like workshops. This encourages personal growth since you can interact with like-minded scholars and learn about job or scholarship opportunities.
Disadvantages of Grants
- Grants are only a short-term solution to your money problems. You can’t bank on them to sustain you throughout your school life.
- Some grants come with strings attached. For instance, they may require you to pursue a particular course, even if you’re uninterested. Plus, the grantmaker may track how you utilize the financial aid they award you.
- Writing the perfect proposal to qualify for a grant is taxing and time-consuming. In fact, it could take months, and you might miss the funding.
What You Should Know About Student Loans
What Are Student Loans?
A student loan refers to money you borrow from a private lender or the government to pay for college. Students usually use financial aid to cater to their tuition fees and other necessary expenses, including rent and books. Still, another lot uses their student loans to pay for vacations or start small businesses.
All student loans accrue interest, which you must pay upon completing your studies. Nevertheless, several types are available, including direct subsidized and unsubsidized loans. While your eligibility for the former depends on financial needs, the latter is not. That means you don’t require a guarantor to qualify for a direct unsubsidized student loan. Instead, your eligibility is hinged on the cost of attendance.
Applying for Student Loans
Have you identified a student loan that suits your needs? Follow these steps to apply:
- Fill out the FAFSA form.
- Evaluate your student funding offers and review the repayment terms for each, including interest rates.
- Analyze the available private student loans and see if they fit your needs.
- Review your loan documents to ensure you provide accurate details.
- Sign and submit the loan documents.
When to Repay Student Loans
Generally, you should begin repaying federal student loans six months after leaving the university/college or as soon as you drop below half-time enrollment. However, the start of the repayment period may depend on the type of loan you were awarded. For example, PLUS student loans enter repayment immediately after the last loan disbursement, even if you’re still in school.
However, you may request a postponement to avoid starting to repay the loan while still a student. You’re also eligible for a deferment if you return to school on a half-time basis and you have begun repaying the student loan.
Advantages of Student Loans
- They’re easy to qualify for and get.
- You can begin repaying them after completing your studies.
- The application process is more accessible than a grant since you don’t need to write a proposal.
- They usually provide more financial aid than grants. Thus, they can cater to most of your needs at school, including tuition and accommodation.
- If you repay them on time, you can build your credit.
Disadvantages of Student Loans
- You must repay them, unlike grants.
- Failure to repay them can damage your credit score.
- You might take longer than expected to repay the loans due to interest rates.
- You may need to work part-time to cover the costs of taking a student loan.
Grants Versus Loans: Differences
Here’s a table illustrating the differences between grants vs student loans:
|Are non-repayable||Must be repaid|
|Isn’t risky since interests aren’t involved.||Comes with a risk since the loan accrues interest, and failure to pay it could affect your credit score.|
|Provide a smaller amount than loans.||Usually offer more financial aid than grants|
|Are based on financial need.||Aren’t based on financial need. This makes every student eligible.|
|Presents networking opportunities and often comes with prestige.||Don’t provide any opportunities to indulge in self-improvement activities.|
Grants vs. Loans: What’s the Right Choice?
Given the chance to choose between grants and student loans, always pick the former. Grants are free money. And they allow you to pursue your educational goals, even when you cannot afford tuition and other essentials. Plus, they save you the trouble of repaying any money in the future. Most student borrowers struggle to repay their loans, and some even consider second jobs to pay off debt.
It’s also worth mentioning that choosing grants over student loans might not be ideal for every student. Remember, your eligibility for a grant is based on your financial situation. Additionally, your grant application could be rejected. Does that mean you should quit trying to join college?
A student loan might be your only way out if you can’t find alternative methods to fund your college education. But as you fill in your application form, understand what you’re signing up for, as it could affect your future. For example, achieving financial stability after college may take a while since you’ll have to repay your debt first.
You probably have a clear understanding of grants and loans differences and benefits by now. As you consider applying for either, remember them and how these financing options can affect your future. What are the advantages of grants over loans? How about the disadvantages of loans compared to grants? Answering these two questions could help you make the right decision.
If you’re already in school and need money, you can research how to borrow money from a cash app. This might help you pay some of your bills while waiting for your student loan or grant.