Grants Vs. Loans: What's The Difference?

Grants and loans are two popular ways to finance portions of your college education; and, while they are both worthwhile to check into and potentially use, there are big differences between the two that are important to familiarize yourself with.

In this article, we’ll discuss grants vs. loans and what the differences and benefits are of them both.


Grants are FREE money and can be awarded to students as a way of funding their education and are based on the meeting of certain criteria, such as:

  • Being accepted for enrollment into a school as an undergraduate
  • Meeting certain financial qualifications - you’ll need to fill out a FAFSA. form
  • Having a high school diploma or GED
  • Being a US citizen or a noncitizen who meets requirements
  • Maintaining a set GPA’s
  • Not being in default on any loans at the time of accepting and using a grant

One of the most popular grants for students is the Pell Grant, but there are also others available, such as:

  • SMART Grant
  • Academic Competitiveness Grant
  • Federal Supplemental Educational Opportunity Grant (FSEOG)

Grants do not have to be repaid, however the student who qualifies for and uses them will have to maintain certain grade point levels and typically not exceed certain financial levels.


Unlike grants, student loans are sums of money you can borrow for the purposes of attending college, but the amounts will need to be paid back with interest. Often times you can combine a student loan to make up the difference in what isn’t covered by a scholarship or grant, or some students find their financial needs have to entirely subsist on loans. You will need to fill out a FAFSA form for a student loan, also.

Loans can be given by either a Federal government plan or from a private institution. There are several different types of loan structures:

  • Direct Subsidized Loans - With this loan structure, the government covers your interest while you are in school or in deferment.
  • Direct Plus Loans - Loans structured for students from the US Department of Education.
  • Direct Unsubsidized Loans - All interest accrued is the responsibility of the borrower and must be repaid.
  • Direct Consolidation Loans - The combination of multiple Federal loans.

Grant Pros and Cons

  • PRO: FREE Grant money is definitely preferable because it is not repayable. Students won’t need to worry about making payments to it like they would a loan, and there certainly is no accruing interest.
  • CON: The amount of money you receive from a grant probably won’t cover everything needed.
  • CON: Grants can be difficult to qualify for and secure.

Loan Pros and Cons

  • PRO: You will have more flexibility and opportunity available because you have more freedom of choice in how you use your loan in school.
  • CON: You have to repay the loan, sometimes repayments begin even while you are still in school.
  • CON: You will most likely have to repay your loan with interest.
  • PRO: Loans are much more easy to secure than grants are.

In the end, it’s probably for the best that you prepare to utilize both grants and loans. Both of them can be helpful when used properly. When you apply to a college and are accepted, you should be given more information on funding and what types of grants and loans are available through the school to help you out with your funding. If you need more information or guidance on what to choose and how to proceed with decisions on your funding, don’t hesitate to Don't Let The Chance For a Free Education Pass You By: Access These Education Grants.speak to a guidance counselor in connection with the school who can give you some direction and help out with your choices.

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