There are many people who are very confused about the difference between Student loan and Scholarship. After reading this article your confusion will vanish and you will get clarity about how student loan is different from scholarship.
What is Scholarship
Scholarship is called a type of financial assistance, which is provided to the students for financial assistance and mental encouragement in further education. Scholarship is commonly provided to meritorious or poor students. Through this, meritorious students whose economic condition is good, they can do their studies in good educational institutions, and such students whose economic condition is not good, they also do not face any problem in studies due to scholarship. This is a kind of help, so where the loan taken for education has to be returned, there is no need to return the scholarship amount. Further good studies of a student only fulfill the purpose of scholarship. One of the objectives of providing this is that with this, those students will do some good work in future along with increasing the level of education in their field.
Scholarships can be of two types.
Merit based scholarship
On this basis the scholarship is awarded to the deserving students who have scored very well in their previous examination. They are more likely to get good marks in future as well, due to which many universities provide scholarship on the basis of merit. With this, if they get good marks, they can get a job at a very good place or build a good company, which gives a lot of publicity to the university or college.
Need based scholarship
On this basis mainly the scholarship is given to the poor students. Due to poverty, it is very difficult to get a good education. In such a situation, many schemes are run by the government, so that people from poor families can also get higher education and the children of poor families can get jobs in their areas and their economic condition improves.
What is Student loan or Education loan
An education loan is an amount borrowed to meet the expenses related to secondary education or higher education. Education loans are intended to cover the cost of tuition, books and supplies, and living expenses while the borrower is in the process of earning a degree. Payments are often deferred while students are in college and, depending on the lender, sometimes for an additional six-month period after they earn a degree. This period is sometimes called the “grace period”. There are mainly two types of education loans.
Federal student loans
Most borrowers first seek federal government funding if they need to borrow money for education expenses. The first step in obtaining education loans through the federal government is to complete a Free Application for Federal Student Aid (FAFSA). Depending on the applicant’s status, particularly with regard to their parent’s dependency, different information may be required to complete the application. Credit checks are usually not required as part of the application process. The amount of principal on the loan or loan is primarily based on the educational institution that the student is going to study in.
Private student loans
In some cases, the student loan package that is issued to a student through the federal government may suggest that the borrower apply for additional funding through private lenders. Private student loans also include state-affiliated loans offered by schools, non-profits and institutional loans. These types of loans will generally follow a more standard application process (as is typical of any private sector loan). A credit check is usually required to apply for a private student loan.