It is no secret that student debt continues to increase. It is estimated to total nearly $1.5 trillion today. The fact is that around 70% of students graduate with some debt at the completion of their degree. Students will find themselves struggling to get an education without emptying their savings. It’s becoming important for a student to obtain financial assistance to help fund their college education. Assistance can be given based on merit, athletics or academics. In addition, there are many loan options. With so much information out there, how do you decipher between your options?
What is the difference between grants, scholarships and loans?
The difference between a loan, a grant, and a scholarship can be confusing. There are important differentiators that can help you select the correct assistance.
A loan is an amount of money that will be borrowed from a specific party that requires the lender to pay it back with interest. A loan can be given by an institution, a bank or even the government. The amount given and the loan rate is decided by the entity you choose to borrow from. With a loan, you do not need to have a certain grade point average or even be talented in a particular sport. There are many different types of loans, however the main ones offered by the Federal Government are Stafford Direct Subsidized Loan, Stafford Direct Unsubsidized Loan, and Federal Perkins Loan. To be considered for each of these, you will have to fill out a FAFSA application.
A grant is money given by the Federal Government, states, or other institutions based on need or merit. In order to receive a grant, you will need to fill out a FAFSA application. The most common grant is the Federal Pell Grant that is based on financial need. Grants have specific criteria since the entity wants to ensure this money goes to the right students.
Scholarships are similar to grants in that they don’t require any repayment or charge any interest. They can also be referred to as “gift money”. Scholarships are generally more focused on merit, whereas a grant’s criteria can vary.
A scholarships requires an application to determine if you are eligible to receive it based on the requirements. Some applications are more involved and require additional effort such as letters of recommendation or essays. It is important to do your research before deciding which scholarship is right for you. Pay attention to requirements and deadlines as they can prevent you from obtaining a scholarship.
Which is right for you?
The answer to this depends on grades, your major, and your school. If you have good grades, applying for a scholarship would be the best decision since you won’t have to repay the money awarded. By doing this, you can decrease any loan amount you need.
If you are eligible for a scholarship, apply. Then move to researching and applying for grants and then finally loans. Loans should be your final step for funding your education as you do have to pay them back. But, being prepared and doing your research will always help you to better minimize your debt.
About Norwalk Community College
Norwalk Community College is accredited by the New England Commission of Higher Education (NECHE). We offer a number of our own scholarships just for NCC students to help them graduate with a degree with lower financial obligations. The NCC Foundation awards more than $1 million in scholarships annually to NCC students. A full year at NCC will cost you less than just one term somewhere else. Learn more about the available Norwalk Community College scholarships and how you can take steps to graduate as debt free as possible.