The Difference Between Loans vs Grants

Searching for any type of financial aid can be a little more than stressful. What can make it even more stressful is when you may not know the difference between your choices. The two main types of financial aid fall under the categories of loans vs grants. There is a huge difference in the two and it is important to know about each before you decide.

Loans, as a rule, are not considered free money. No matter the amount that you plan on borrowing, you will still have to pay this amount back. Another thing that you have to keep in mind about loans is that there will be interest added in when it comes time to pay back the loans.

Most loans come with a set period of time before you have to start repaying them, but interest usually starts with the very first payment that you make. Depending on the lender, these loans can carry very high rates or you can sometimes find loans that will defer interest add-ons until a later date.

Grants are what most individuals strive to get out of financial aid. This is what you could call "free money". Any amount that you are approved for is money that you do not have to payback. This is your money to keep and use in the way that you need it.

Something that many do not realize come with grants is the fact that they are a little bit harder to apply for than loans. You usually have to write a proposal as a way of convincing the funder that you need this money. There are also guidelines that must be followed on many loans so that the funder is sure the money is going in the right direction.

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