The difference between a Student Loan and a Scholarship
While they’re differences between scholarships and student loans, both of them are similar in their function. Meaning, both scholarships, and student loans are granted in order to help in footing students’ bills while studying. Sometimes the two of them can be granted at the same time while in most cases, student loans are the most common.
They’re many differences between student’s loan and scholarship offers despite the similarities they share. To know the differences first of all we need to know what scholarship means and what student loans are. They’re methods of application, how they’re granted and the amount entitled to each accordingly. We must also be able to tell if they’re to be returned and how to return it or if they’re not to, and the alternative ways.
What is a Scholarship?
Everyone must have heard of the word scholarship at least once or many times. It is a very familiar term when discussing educational fees and their aids. It is a form of award-winning grants which are given to students based on certain criteria. The scholarship is mostly granted on the basis of good academic performance or any special skills possessed by a certain individual which makes him or her qualified.
In a nutshell, scholarship awards are for the high performing people and it is very competitive. This is because most of the programs offered in this award-winning grant are opened to a large audience.
Sometimes a scholarship scheme can be opened to every nation to apply, sometimes the whole of a country while in most cases a specific group of people. Going by this way it will be always tough to obtain any scholarship award, especially the one which is prone to large applicants because you’re likely to meet champions in the same struggle.
Scholarships are of different kinds. Some could be fully funded while others are partial. A scholarship could be granted with a basis to cover the tuition fees only while others for just living expenses. Some could be granted for student’s books, some specifically for accommodations, and so on. You can search and apply to any type of scholarship of your choice as they’re thousands of them out there.
What is a Student Loan?
Student loan on the other hand is a form of financial aid on its own that helps students to further their education without going through the burden or worries of financial issues.
With the help of the student loan, individuals are no longer subjected to the worries of going through the trauma or thinking of how and where to obtain money to sponsor their education. It is an initiative which will help you to cover all your financial expenses during your studies.
As the name implies, student loans are to be paid back like any other type of loan granted. This should not be a call for big worries because the whole process is made easier and compatible for individuals. There’s a certain threshold for this due to some low-income earners that may not be able to combine the payments and their financial needs.
Types of students loan
Students loans are of two types respectively, Maintenance loans and tuition fee loans.
Tuition fee loan: This covers the whole of your payment involving tuition fee alone and it is normally paid directly to the school’s account. The amount is fixed according to your institution fees.
Maintenance Loans; The two students’ loan, both tuition fees and maintenance always go together. While the former is deposited into the school’s account, maintenance loans are directly credited to students. The fee is assessed based on certain criteria and decided by the authorities. It is a lump payment at the beginning of the semester or yearly in most cases. A maintenance loan covers all the expenses a student is likely to make during their studies such as accommodation, feeds, books, and other petty payments.
Conditions for Paying students loan
- You must be employed: Unemployed graduates will not be compelled to pay up their loans as far as they don’t have any source of income yet. Those that are working under government or any private sector will have their loans deducted directly. Conversely, for individuals that are self-employed, you’re expected to pay off your loans too.
- Your income must be above or within the threshold: Not all workers are compelled to pay their students loans. Some pays are ridiculous so to manage such income and then paying student loan at the same time is a huge burden. This is why it is established that individuals must meet a certain income threshold to be enrolled in the repayments.
- They may be forgiven under certain conditions: They’re some cases where individuals can be forgiven if they’re owing student loans like joining the army or Americorps.
What are the differences between Loans and Scholarships?
From the two terms definition, the difference is clear however what makes them so different and why should you apply for any of the two?
- Student loans are granted on the agreement that you will pay back when you graduate and meet some conditions after employment.
Scholarship on the other hand is a free offer. It is given forever and no payments after one have graduated.
- You can not get hold of your scholarship award or even see it. Meaning if you’re offered a certain scholarship either tuition fee discounts or book allowance, it’ll be paid directly to the management account.
Students loan on the other hand (maintenance loan) is granted to students directly by crediting their account or through check. Yearly or each academic session.
- While many scholarship schemes are not granted once, student loans are always paid off in one lump sum usually as the session begins.