What is the difference between a loan and a grant?
Grants are considered financial aid that you don’t have to pay back. They are a type of gift aid or “free” money. Loans, on the other hand, are funds that DO need to be paid back to either the college or a lender. Often, you do not need to pay loans back until after you are finished with school. They DO need to be paid back, nonetheless.
Another superb question. You’re on a roll. A loan, as the name implies, is conducted through a lending company and is expected to be repaid within a reasonable amount of time. Usually the lending company (a bank or credit union, etc.) waives payment on your loan as long as you are attending class, but you will have to begin making those payments after six months of graduating. A grant (often called a Pell Grant), on the other hand, is free money given to you by the government without you ever having to pay back a cent. Your financial aid adviser will help you decide what is best and what you will be eligible for with your income level. Okay, so that’s clear. Now, you’ll want to decide on the college you want to attend. Go ahead. I’ll wait…
Related Questions
- Must a school determine a students eligibility for a subsidized Federal Stafford Loan before determining a parent borrowers eligibility for a Federal PLUS Loan?
- If Federal PLUS Loan funds create a FSA credit balance, may the funds be paid to the student instead of the parent borrower?
- What is the difference between a loan and a grant?
