Student loans and scholarships serve as a mode of funding for students who desire to attain a specific educational level. The basis for receiving both scholarships and student loans is far different from each other.
In addition, the terms and conditions enclosed in both scholarships and student loans are also different from each other. An example of the difference in their terms and conditions is that students who choose to get funded via student loans will have to worry about paying back what they got, while students receiving scholarship benefits never have to worry about repayment plans.
What are Student Loans and Scholarships?
Students Loans
Students loan is a concept originated from the term loan- which means to borrow. A student loan is a type of funding for people or students who can’t afford to cover their educational costs with the condition of paying back within a specified period.
In most cases, a student taking loans will have to repay the loans with interest which could be immediately or after completion of their educational program.
Scholarships
Scholarships are considered freebies for eligible students who desire financial support. The grants are provided for free with no repayment conditions, and you can use the funds received to settle all academic bills.
Students may resort to other funding options such as borrowing if they receive partial funding to settle their academic bills. However, the purpose of every scholarship program is to reduce student debt rates and to help people achieve their academic objectives.
Differences
| Differences Between Scholarship And Students Loans | ||
| Scholarship | Student Loans | |
| 1 | Scholarship funds are not usually sent to bank accounts, to avoid misuse of funds. Most scholarship sponsors pay the amount awarded directly to the academic body to offset further payments from the selected student. | Students who apply for student loans usually receive their funds directly into their accounts and may choose to spend the funds received outside their academic walls. |
| 2 | The financial benefits of most scholarship programs are usually paid periodically, this may be every academic session or every semester. | You can receive the total amount of money loaned for your tuition at once. |
| 3 | Scholarship awardees are not obligated to sign any contract aimed at ensuring they repay the money received. | Beneficiaries of student loan schemes are to sign a contract of repaying the loan during or after the completion of their studies. |
| 4 | To qualify for a scholarship, the student’s academic background, racial background, etc will be checked. | Credit scores and income statements will be checked. |
Conclusion
Students Loans and scholarships are targeted at students who can’t afford to achieve their educational goals. Students Loans can be an alternative to scholarship programs if a student is ineligible to receive scholarship awards, but their differences include their terms and conditions, mode of funding, etc.
