International students wondering how to pay for their college in the USA typically turn to two funding options – scholarships and loans. But here comes the question, “Are student loans different from a scholarship?” Of course!
There is a huge difference between a student loan and a scholarship. The main difference is that you don’t have to repay your scholarship funds. Scholarships are free and are awarded to the best brains. On the other hand, student loans are what you borrow to fund your education. If you get a student loan, you will have to pay it back with interest.
While you shouldn’t be discouraged by the interest, student loans are good alternatives to ensure that you fund your education without dropping out. You should get a student loan if you’re qualified.
Of course, many colleges and universities in America often provide various financial aid opportunities for students. So, there are other options you should explore.
Check out more differences between a student loan and a scholarship you should consider before you apply for any of them.
What is the difference between a student loan and a scholarship?
Here’s a breakdown of both types of financial aid. Basically, we will go over what they are and how to be eligible for each one.
A student loan is a loan that you can acquire as a student to help pay for your education. You can use this loan to pay for your tuition, school materials such as books, lodging fees, and food expenditures while attending college or university.
However, this type of financial aid requires that you repay the amount borrowed from the loan provider following your student loan policy and contract.
Qualification for a student loan is often determined by financial need and certain qualifying criteria. You may be eligible for a student loan if you demonstrate financial need, which means your income may be insufficient to pay for your education. This is common with the USA Financial aid and student loans program.
To get loans from Private institutions such as Salimae or MPower Financing, you must meet specific eligibility criteria, which may include an excellent credit history to ensure you can meet your student loan payback obligations.
On the other hand, a scholarship is prize money awarded to you by a scholarship provider if you meet certain criteria. Scholarship sponsors award scholarships to students with specific attributes such as academic brilliance, athletic skill, leadership potential, and more. Interestingly, you won’t pay back this type of financial aid. It’s all yours!
One of the most popular scholarships you can get is the academic or merit scholarship, and this type of award requires you to demonstrate a high level of academic excellence to qualify.
Other types of scholarships include need-based, athletic, community service, and employer scholarships.
Like student loans, your scholarship donor would provide your scholarship prize money. They will work with the financial department of your school or institution to pay for your studies. Scholarship monies usually cover tuition, books, room and board, transportation, and sometimes living costs.
Do Student Loans Count as Loans?
In a nutshell, student loans are debt and count as loans. On the other hand, scholarships and other forms of financial grants are considered income depending on how the money is spent. However, the money you borrow as part of your student loan is unlike normal debt. Because of the payment mode, you usually start paying back your loans after completing your studies and getting a job.