There are a few key differences between financial aid and scholarships. First, some forms of financial aid, primarily loans, will need to be paid back, whereas scholarships are awards that never need to be paid back. In addition, financial aid is typically based on need. Although scholarships may also be need-based, this is not always the case; some scholarships may be based entirely on merit. The amounts of both can vary widely, all the way from just the cost of a book or two, to the entire cost of tuition, room, and board for the school year. Most students find that they use a combination of different types of financial aid and scholarships in order to finance their education.
Grants and loans are some of the most common types of financial aid. Loans need to be paid back after graduation, whereas grants, like scholarships, never need to be repaid. Grants are typically always need based, while loans may or may not be need based. Students who do not demonstrate a financial need for loans may find that they have to pursue private loans in order to fund their education, rather than getting low-interest federal loans from the government. Scholarships may be based on financial need, merit, or a combination of both. For instance, a student might be eligible for a scholarship if he or she has a demonstrated financial need, and has kept her grades up over a certain point throughout the year, or donated a significant portion of time to volunteer work.
Primarily, students should remember that the difference between financial aid and scholarships is that scholarships do not need to be paid back. For this reason, it is important to pursue as many scholarship opportunities as possible, as well as grant programs, to finance education. This will help to reduce the debt load that a student has after he or she graduates from college, which can be quite prohibitive. It is rare to find a student who has not made at least some use of financial aid and scholarships when getting his or her degree.
Another thing to remember about financial aid and scholarships is that being selected for a scholarship can look good on a student’s resume. This is especially true for merit based scholarships. On the other hand, taking out student loans and repaying them as agreed can help to build a solid credit history, and make it more likely that he or she will receive additional credit in the future, so there are advantages to both.