The average college student pays anywhere from $10,230 to $35,830 per year in tuition, depending on whether classes are taken at a public or private school.
This amount doesn’t even take into consideration all of the additional expenses students typically have when furthering their education, some of which include costs associated with purchasing books and supplies or paying for housing, meals, and transportation to and from class.
With 78 percent of U.S. workers currently living paycheck to paycheck, many college-bound students wind up turning to grants and loans to help pay for these types of expenses. But what’s the difference between a grant and a loan when it comes to paying for college?
What a Loan Is
Merriam-Webster defines a loan as “money lent at interest” or “something lent usually for the borrower’s temporary use.” Therefore, if you need a new car, for instance, you may decide to go to the bank and ask them for a loan. If they agree to give it to you, this involves signing a form that says that you not only agree to pay back the money they’re lending you over a specific period of time, but also that you will repay an agreed upon amount of interest.
Well, you can also take out a loan for your educational expenses. Some student loans can be secured by filing for federal student aid via the Free Application for Federal Student Aid (FAFSA). Others are sought privately, such as by going to your local bank and asking them to loan you the money you need to pay for your tuition and school-related bills.
Paying for college with the help of loans is fairly common, with Lending Tree reporting that approximately 69 percent of students decide to take this route. Additionally, the average college student graduates with a student loan debt somewhere around $29,800.
What a Grant Is
As Sallie Mae—one of the nation’s most well-known lenders for education-related expenses—indicates, the main difference between a grant and a loan is that “college grants are financial aid that doesn’t have to be paid back.”
It’s like when, out of the kindness of their heart, a parent, grandparent, or other family member gives you cash with no strings attached to put toward your college expenses. In this case, there is no expectation of you repaying the money once you graduate and are working within your chosen field.
The same is true with grants. This money is given to you with the sole purpose of enhancing your education. So, once you have your degree, you don’t have to worry about making payments or making arrangements to pay the money (and interest) back.
Additional Differences Between Grants and Loans
Other than the most obvious difference between a grant and a loan when paying for college—whether or not you have to repay the money—there are other differences between the two as well.
For instance, to secure a loan, you may have to prove that you’re able to abide by the repayment agreement. This could include showing a certain income amount or having a specific level of assets. Alternatively, because grants do not have to be repaid, this type of requirement would not apply.
Also, while a loan may be available to most all students interested in obtaining help with paying for college expenses, some grants have more stringent application requirements. As an example, TEACH grants are grants that are only available to college students interested in becoming teachers in a low-income area after graduating. Additionally, Iraq and Afghanistan Service Grants are only available for students who have a parent or guardian who died while serving in the military in one of these two locations.
Need Help Paying for College?
If you still have questions about the differences between a grant and a loan, or if you’d like to talk to someone about your options for paying for your college education, contact Saint Leo University’s Student Financial Services team today. This department is here to help all students with all of their financial aid needs.