The Difference Between Student Loans and Grants For College

When students decide to go to school, one of the last things on their mind is considering how they’re going to pay for college over the next few years. Here are the differences between student loans and grants and the benefits and negatives of each one.

One of the first things you need to consider is how much money it is going to cost to go to college. You need this as a determining factor when considering whether or not to take out a student loan or to apply for grants.

Student loans are taken out usually as an easy source of funding to pay for college education. I recently took out tens of thousands of dollars to cover the money that I needed to earn for a master’s degree. If I could go back and do it again, I might not have made this choice.

Grants are better way to go because this is money that you do not have to repay. It is like getting a windfall check in the mail to pay your bills and not using your credit card because that’s all you have to use. One of the benefits for student loans is that the application process begins on line with the FAFSA and typically ends with you signing several papers called promissory notes which you don’t have to worry about until you have earned your degree.

If you decide to go the free money route, the best way to go is with the teach grants or the Pell Grant which is limited to about $5000 each semester but will provide you with enough money to pay for your first couple years of college.

Too many people take out both grants and student loans without realizing that it is a bad decision to make if they really didn’t need the money. They may spend it frivolously and at the end of it all realize it should have gotten another source of income instead of making a choice to accrue future debt.

At the end of the day, or at the end of your college career, you will realize whether or not you made a good choice or not regarding your funding. If you land the job that you’ve always wanted and can pay off your debts, if you have any, then you probably made the best choice.

How To Find Free College Grant Money

You have heard the expression many times before – if you think college is expensive, you ought to see how expensive ignorance is. While there might be some wry humor in that expression, there should be no excuse for someone not going to college these days. There may be very valid reasons for not going to college, but a lack of financial funding should clearly not be one of those reasons.

College grants and college scholarships are abounding today, and in fact, many of the available grants and scholarships actually are not awarded every year, for the simple reason that nobody applied for them! As crazy as that sounds, it is true. Businesses and corporations use the college grant and college scholarships they offer as a tax writeoff, and if it is not awarded, then they lose out on that writeoff, so they are more anxious than ever to award these college grants and college scholarships.

One common myth which is held by many people is that you need to show a financial need before you will be awarded a college grant or college scholarship, or that you need to excel in a particular area, like the star quarterback in football, the ace basketball player who can shoot three-pointers all day long, the violin player or the piano player where it appears that Carnegie Hall is clearly in their very talented musical future, etc. But note that I said these are “myths”. In other words, these perceptions are incorrect.

Today, a college grant or college scholarship is available to virtually any student who has the motivation and the incentive to fill out the application forms. In fact, many students get multiple scholarships and grants, simply because they sat down and took the time to fill out the applications. These are students who do not excel in sports, in music, in drama, or any other area – they simply want to go to college, they understand the importance of having a college education in today’s very competitive real world, and they made the time to go through the steps required.

While there are both grants and scholarships available, grants are more likely to be awarded based on financial need, whereas scholarships are not nearly as closely tied to whether or not there is a financial need. But then again, when you look at the cost of a college education these days, after considering living expenses in a dorm or a campus apartment, meals, books and other very basic necessities, the cost of that college education is going to run well into five figures, perhaps even six figures, so a financial need is not going to be hard to justify for virtually anyone.

College grants and college scholarships differ greatly from the usual student loans like the FAFSA loan that is available through almost any college’s financial aid or admissions office. A student loan needs to be paid back. Although payments usually do not start until after the student has graduated and the interest rate is quite low, the fact that it needs to be paid back makes grants and scholarships a much more attractive option to pursue, since neither grants nor scholarships need to be paid back.

There are going to be incidentals that cannot be anticipated when you are going to college, and the grant or scholarship money may not be immediately available. For this reason, it is a good idea to get a Student Credit Card to handle those unexpected expenses and not put undue stress on you when you need that extra book or to pay that additional lab fee or whatever.

Take the time to search out the many resources available for a college grant or college scholarship. After graduation, it is much better for you if you start out by not being in a huge pile of debt, but can start clean with your new degree.