How is a student loan different from a scholarship

Once any student faces this question – how do the students’ fellowships and loans differ? So, loans are like financial support the students have to return after some time with a low interest rate. Fellowships signify the money prize, which makes all money-related things more available. The fellowships are measured straight from the cost of education. And compared to loans, you do not have to return the fellowship.

So, in this post, we will discuss students’ grants and loans in detail – what they signify and their rights and wrongs.

First of all, let’s find out the meaning of students’ fellowships and loans. 

A loan means a kind of credit to help the majors pay all related to the studies. The loan’s interest rate can be rather low depending on the credit kind; you can have an extended payment timetable. 

In its turn, fellowship indicates financial support that the students earn to continue their education. When awarding it, the educational establishment considers such factors as achievements, talent, leadership, and others. 

Now, let’s try to understand the difference between grants and loans. For this purpose, we will take two aspects – the process of getting money and admissibility. 

Getting money

Loans – The total loan sum is shared by the year or semester, and then the organization that pays the loan repays it to the institution where you study. In some cases, according to the chosen loan, this credit can also cover your living, food, books, and other college stuff. 

Scholarship – The fellowship payment is contingent on the subject who makes this payment. Mostly, it is the educational establishments that award the grants, that is why their financial department makes the payment. If the third party provides this fellowship, it transfers money directly to the institution or the student.


Loans – The loans are paid directly from the state establishment. That is why to get it, you need to submit a federal student aid-free application and comply with all financial and admissibility demands. If you apply for a private loan, you need to show that you deserve this money and convey that you will return money in the future. In some cases, when deciding, the creditors can consider the student’s credit history and his revenue.

Fellowship – Depending on donor and program, the fellowship selecting factors vary. The education sphere has three kinds of grants, and each of them comes with its determining factors. 

If everything is clear, let’s see what advantages and drawbacks student’s grants and loans have.

The loan includes the following advantages:

  • If you pay your loan in time or earlier, you will have a good credit history that will help you quickly get credit cards or personal credits in the future.
  • It is simple to submit and get. Besides, you can receive a loan with a low rate of interest. 
  • Compared to the fellowship, it is awarded according to the needs and financial basis.

The loan’s drawbacks are the following:

  • Although a loan is simple to receive, you have to return it with appropriate interest during a specific period (mainly after you finish university).
  • Since the loan has a rate of interest, the credit will grow until you return it.
  • The credit can accrue, and when it gets hard to manage it, you can have problems with it. Besides, it can complicate the ability to pay other costs.

When it comes to advantages, student’s grant can offer you the following:

  • Complete freedom as you mustn’t return the paid money.
  • Possibility to submit for many grants, and there are no limits in the number of grants you can earn.
  • Since there are various kinds of fellowships, you get a possibility to earn one or even several fellowships.
  • Getting a grant means a reward for your efforts, accomplishments, and skills. And this helps to be recognized among others. 

At the same time, grants come with such cons as:

  • The significant part of grants is based on students’ achievements connected to community, background, etc. 
  • When looking for the fellowships, try to choose those that attract you the most and submit for them. 
  • Every grant program has restricted slots, that is why not everyone can participate in the program and get the fellowship.
  • There are cases when the grants are not fairly provided (meaning that it goes to those who are not worthy of it).

Sometimes students wonder whether they can earn both a fellowship and loan. So, you can apply for a loan after getting the grant. But in the future, you can have some problems with it, since the fellowship can impact your getting-a-loan-right.

When applying to a specific educational program, the institution always counts your needs in money. That is why when you earn a grant or grants, your expenses decrease. And this leads to the situation that you have a right to get less financial support. 

Seldom, such cases when the grants cannot cover all majors’ necessities happen. Then the students can get a fellowship of one dollar. It is a sum of money provided according to the guiding principles of the particular program. Besides, the students can get the last dollar grant aimed to bear the remaining gap after using all kinds of financial support. 

To sum up

So, now you know everything about students’ fellowships and loans. On the one side, loans are simple to apply for and earn. In many cases, your academic performance does not matter. What truly matters is your creditworthiness. And the main thing here – you’ll have to return this credit with the applied interest rate. 

As for the fellowship signifies the reward for all your efforts, accomplishments, academic performance, or even for your essays. And in this case, the reward does not have a price – in the end, you do not have to return it.  

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