Grants and loans are two very common and very popular options available to individuals looking to finance portions of their college education; and, while they are both worth taking the time to check out and potentially use, there are some pretty major differences between them.

In this article, we’ll take a deeper look into grants and loans, what their differences are, and which of them can benefit you the most.


Grants are 100% FREE money and can be awarded to students as a means of funding their education. Approval is generally based on meeting certain criteria, such as:

  • Being a legal US citizen or a non-citizen who meets the requirements
  • Being accepted for enrollment as an undergraduate into a school
  • Maintaining a specific GPA
  • Meet certain financial qualifications – (For example, you’ll be required to fill out a FAFSA. Form)
  • Possessing a high school diploma or GED
  • You cannot currently be in default on any loans at the time of accepting and using a grant

One of the most common grants for students is the Pell Grant, but there are plenty of other viable options available, such as:

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

Even though grants don’t have to be repaid, the student is still responsible for maintaining a specific grade point level and they aren’t typically allowed to exceed certain financial levels either.


Unlike grants, student loans are sums of money that can be borrowed to pay for one’s college fees. And just like other loans, the amount that needs to be paid back goes up with interest. In most cases, you can use a student loan to cover the gap left by what’s not covered by a scholarship or grant. Sometimes students find that their financial needs have to completely rely on loans. To obtain a student loan you will need to fill out a FAFSA as well.

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

  • Direct Consolidation Loans – are the combination of multiple Federal loans.
  • Direct Plus Loans – are tailored for students from the US Department of Education.
  • Direct Subsidized Loans – have the government cover your interest during the time that you’re in school or deferment.
  • Direct Unsubsidized Loans – accrues interest and is the responsibility of the borrower to be repaid.

Grant Pros and Cons

PRO: Hands down, FREE Grant money is the top choice because it is not repayable. Students won’t need to worry about making payments like they would have to do with a loan. And since it isn’t a loan, that means there is no accruing interest.

CON: The total amount of grant money you receive will most likely not cover all your expenses.

CON: Grants tend to be difficult to qualify for and obtain.

Loan Pros and Cons

PRO: There is more flexibility available because you have the freedom of choice in how you use your loan while attending school.

CON: You are required to repay the loan, and in some cases, repayments can start while you are still in school.

CON: You will accrue interest, which means more money out of your pocket.

PRO: Loans are far easier to obtain than grants.

In Conclusion

If you ask me, I’d say it’s for the best that you plan to utilize both grants and loans. They can both be helpful in their own right but together, you have better coverage. This allows you to not worry so much about your finances (at the time) and lets you focus on your education. If you apply to college and get accepted, you will be given more information regarding your funding and what types of grants and loans are available through the school to assist you. If you need more information or guidance on what to choose and how to proceed with decisions on your funding, don’t hesitate to speak to a guidance counselor who is affiliated with the school that can provide you with some direction and assist you with making smart choices.