What is the difference between loans and grants?
Loans and grants both do the same thing: they provide you or your child with money to continue their college education. They go about it in different ways however. Basically you pay for a student loan and a student grant is money given to you without repayment.
Grants, like loans, are either public or private. A grant, like a scholarship, is money awarded to you. You usually have to apply for it and meet certain qualifications. There is competition for grants, there are usually a lot of people applying. You have to do something to stand out in order to receive them, this usually means writing an essay or having a good GPA. There are many different types of grants with many different types of qualifications. There are a lot of private grants offered by certain people, companies or institutions. A grant does not have to be repaid, it is basically free money you can use towards your education.
The Pell Grant
The most famous federal grant is the Pell Grant. The Pell Grant is a federally awarded grant given to lower income undergraduate students and a select sect of postgraduate students. The amount of the grant depends on your income, enrollment status and cost of tuition at the school you are planning to attend. Like a federal student loan, you will need to fill out the FASFA in order to apply for a Pell Grant.
How Grants Compare to Loans
Grants are free money, loans are money you pay back plus interest. Grants are obviously more desirable but could be hard to come by, because the competition for them is something fierce. There are all types of grants with all types of restrictions, such as gender, ethnicity, income and military background. Loans, especially federal student loans, can be had by anyone that wants to apply. Grants only offer a set sum of money, usually not covering the full cost of education. Your best bet is to apply for as many grants as you can and use them to help pay for your education, while still taking out a loan.