If you’ve been exploring your options for financial aid, you’ve probably run into the main types that students rely on: grants and loans. Of course, you want to make your education affordable, but you also want to make sure you know what each option means before you commit to it. Here’s what you need to know about the differences between grants and loans.
The main difference between a grant and a loan is whether or not you must repay them. A grant gives you money that you won’t have to pay back. (There are some exceptions regarding federal grant repayment.) They are often issued because you have demonstrated financial need of some kind. Grants can be issued either federally or privately. To apply for a federal grant, you will need to fill out a Free Application for Federal Student Aid, or FAFSA form.
If you take out a student loan, you are borrowing money that will have to be repaid. While you typically don’t have to begin repaying your federal student loans until after you leave school, your loan will also develop interest that must be paid. Many federal student loans will provide you with manageable repayment plans and interest rates so that you are able to repay them. If you qualify for subsidized student loans, the government will pay your interest while you’re in school.
Private student loans may require you to make payments while you’re still in school. The interest rates can often be higher than those of federal loans as well. These rates will depend on your credit. In general, it’s best to see what kind of aid you can get from federal loans and other grants as well as scholarships before you turn to private loans. However, before you decide to take out a private or public student loan, make sure you understand the terms of the loan. Know when you need to begin making payments and what will be expected of you so it doesn’t surprise you later.
South College can help you find different federal, state, and private loans and grants. We want you to receive the financial assistance you need for your education. Visit our Financial Aid page for more information.