Grants: Grants are funds that you don't have to pay back. The funds usually come from the government and your eligibility is determined when you apply for FAFSA. Grants are generally needs-based. Qualifications for grants include family income, cost of the institution, and whether or not the applicant has disabilities.
Scholarships: Like grants, scholarships are funds that you don't have to pay back. Unlike grants, however, they are merit-based rather than needs-based. This means that they are based on criteria such as test scores, GPA, extracurricular activities, field of study, etc.
Loans: Loans are funds that you do have to pay back. Federal loans come from the government and generally have lower interest rates, income-based repayment options, and opportunities for loan forgiveness. Private loans come from privately owned companies, such as banks. They are often easier to get but usually come with steep interest rates and less repayment flexibility.
Work Study: Work studies are federally-funded programs that offer students part time employment while in school to help pay for educational expenses.
Scholarships: Like grants, scholarships are funds that you don't have to pay back. Unlike grants, however, they are merit-based rather than needs-based. This means that they are based on criteria such as test scores, GPA, extracurricular activities, field of study, etc.
Loans: Loans are funds that you do have to pay back. Federal loans come from the government and generally have lower interest rates, income-based repayment options, and opportunities for loan forgiveness. Private loans come from privately owned companies, such as banks. They are often easier to get but usually come with steep interest rates and less repayment flexibility.
Work Study: Work studies are federally-funded programs that offer students part time employment while in school to help pay for educational expenses.
private vs. federal funding
When discussing financial aid opportunities, it is important to note the difference between private and federal funding and how that impacts your financial aid.
Federal funding: Federal funds come directly from the government, whether it's federal or state. In general, federal funds have lower interest rates, more repayment options, including income-based driven payments, and opportunities for loan forgiveness through the PSLF program (Public Service Loan Forgiveness). Whether it's federal loans, grants, or scholarships, an important factor to consider when weighing your options is that these funds are available for U.S. Citizens only.
Private funding: Private funding comes into play when federal funding is not available or if a student has used all federal funds available to them (they max out!). Certain privately funded aid, such as loans, are a popular option because they are quick and fairly easy to apply for. A caution about private loans before you apply for them: they have steeper interest rates and fewer repayment options (meaning no-income driven options). However, private loans and scholarships are great options for those who are ineligible for other types of aid (non-U.S. citizens or undocumented students often qualify. The Bell Tower Scholarship is an example).
Federal funding: Federal funds come directly from the government, whether it's federal or state. In general, federal funds have lower interest rates, more repayment options, including income-based driven payments, and opportunities for loan forgiveness through the PSLF program (Public Service Loan Forgiveness). Whether it's federal loans, grants, or scholarships, an important factor to consider when weighing your options is that these funds are available for U.S. Citizens only.
Private funding: Private funding comes into play when federal funding is not available or if a student has used all federal funds available to them (they max out!). Certain privately funded aid, such as loans, are a popular option because they are quick and fairly easy to apply for. A caution about private loans before you apply for them: they have steeper interest rates and fewer repayment options (meaning no-income driven options). However, private loans and scholarships are great options for those who are ineligible for other types of aid (non-U.S. citizens or undocumented students often qualify. The Bell Tower Scholarship is an example).
Additional resources
- https://studentaid.gov/h/understand-aid/how-aid-works
- https://studentaid.gov/understand-aid/types
- https://drexel.edu/soe/admissions/financial-aid/difference-between-student-grants-vs-loans/#:~:text=In%20general%2C%20grants%20are%20given,used%20type%20of%20financial%20assistance.
- https://www.clevergirlfinance.com/how-do-student-loans-work/
- https://www.clevergirlfinance.com/how-to-avoid-student-loans/
