Grant, Scholarship, or Loan: What’s the Difference?

At HESAA, we know that there are lots of terms that we use when talking about student financial aid. In this article we are going to take a closer look at three of the most common types of financial aid—grants, scholarships, and student loans.

What is a Grant?

A grant is a certain amount of money that is given to a person by an organization or the government. Recipients of grants are not limited to just students, but for the purposes this article we will be talking specifically about student grants. One of the great things about receiving a grant is that the recipient does not need to repay the grant—in other words, it’s free money. Student grants can help pay for tuition, housing, food, books, and other school-related expenses. People often confuse grants with scholarships. After all, they are both free money, right? The difference is that grants are typically need-based while scholarships are merit-based.

One of the most common grants you might hear about is called a Federal Pell Grant. This grant is awarded through the federal government and is for undergraduate students who have not earned a bachelor’s or professional degree. Students can apply for a Pell Grant by filling out the Free Application for Federal Student Aid (FAFSA). The award amount varies based on your financial need, the cost of attendance at your school, whether you are a part-time or full-time student, and a few other variables. Some fail to fill out their FAFSA because they think it is too hard. HESAA has gathered some helpful tips to get started. You can also check the current maximum award amounts at the Federal Student Aid website.

What defines a Scholarship?

Scholarships are a certain amount of money that is given to a person for educational purposes based on academic or some other type of achievement. This is an instance where getting good grades can really help you pay for school. In addition to academic scholarships, there are also athletic and artistic scholarships available.

Scholarships come from a variety of places. Some come directly from universities while others come from organizations. There are even state sponsored scholarships like New Jersey’s Governor’s Urban Scholarship. To learn more about scholarship opportunities in New Jersey, visit HESAA.

You may have heard people talking about full-ride scholarships. These scholarships often cover tuition, books, fees, and even room and board. It’s easy to see why these sought-after scholarships are so competitive. With so many scholarships out there, it can be difficult to know where to start looking. We suggest working with your high school guidance counselor to identify scholarship possibilities that may be right for you based on your grades, interests, and experience. In addition to your high school counselor, consider using one of the many scholarship locating websites or asking a mentor or parent to assist you in finding scholarship opportunities.

What makes Student Loans different?

Student loans are money that you borrow from either the government or a private institution to help you pay for school. Student loans often have a lower interest rate than other types of loans, and you typically don’t have to start repaying the loan until after you graduate. Even if you end up receiving scholarships and grants, you still may not have enough money to cover the cost of attending school. Most students looking to get a student loan get one through the federal government. If a federal student loan still doesn’t cover your expenses, you can consider taking out a supplemental student loan such as an NJCLASS loan. These student loans can make your dream of attending college a reality.