Understanding the difference between student grants and student loans is crucial for every student planning to fund their education. With college costs rising, knowing your options can save you from long-term debt and financial stress.
At Apply Adviser, we aim to simplify complex education topics. This guide clearly explains the key distinctions between student grants and student loans so you can make informed decisions before taking on any financial aid.
What Are Student Grants?
Free Financial Aid That Doesn’t Need Repayment
Student grants are non-repayable financial awards given to students based on need, merit, or specific eligibility criteria such as family income, background, or academic performance. They are typically provided by governments, universities, or private organizations.
Key Features:
- No repayment required
- Based on financial need or merit
- Often targeted to underrepresented groups
What Are Student Loans?
Borrowed Money You Must Repay With Interest
Student loans are borrowed funds that help cover tuition fees, books, and living expenses. These loans must be repaid with interest after graduation or when you begin earning above a certain threshold.
Key Features:
- Must be repaid with interest
- Available from government or private lenders
- Can be subsidized (low interest) or unsubsidized
Student Grants vs Student Loans Explained: Key Differences
| Feature | Student Grants | Student Loans |
| Repayment | Not required | Mandatory, with interest |
| Eligibility | Based on need/merit | Based on need or credit score |
| Funding Source | Government, college, private donors | Government, banks, financial firms |
| Financial Burden | No future burden | Long-term financial responsibility |
| Impact on Credit Score | No effect | Affects credit if not repaid on time |
When to Choose a Grant Over a Loan
Grants Are Ideal If You Qualify and Want Zero Debt
- Choose grants if you’re eligible based on low income or academic merit.
- They are perfect for students who want to reduce financial stress post-graduation.
- Always apply for grants and scholarships before considering loans.
When Are Student Loans Necessary?
Loans Help Fill Gaps When Grants Aren’t Enough
- Loans are useful when grants and savings don’t cover all expenses.
- They are structured to help students invest in their education, especially for professional or postgraduate studies.
- Consider federal loans first due to better repayment terms.
How to Apply for Student Grants and Loans
Start Early, Stay Organized, and Use Trusted Portals
- Fill out the FAFSA (Free Application for Federal Student Aid) to access grants and federal loans.
- Check your college’s financial aid office for institution-specific aid.
- Explore private foundations for niche scholarships and grants.
FAQs
Q1. Can I get both a student grant and a student loan?
A: Yes, many students use grants first and loans to cover remaining expenses.
Q2. Do student loans impact my credit score?
A: Yes, they can affect your score positively or negatively depending on repayment behavior.
Q3. Is there any situation where I don’t repay a student loan?
A: Some government loans offer forgiveness programs for specific professions or public service.
Q4. Do I have to pay taxes on student grants?
A: Most grants used for tuition and books are tax-free, but any used for living expenses may be taxable.
Q5. Are student grants guaranteed every year?
A: No, you often need to reapply annually and maintain eligibility to continue receiving grants.
Conclusion
Choosing between a student grant and a student loan can significantly impact your financial future. At Apply Adviser, we recommend always pursuing grants and scholarships first, as they offer a debt-free way to fund your education. Loans should be your backup plan—used wisely and only when necessary. Understanding both options gives you power over your education and finances.
