Financial Aid vs. Student Loans: What’s the Difference?

Financial Aid vs. Student Loans: What’s the Difference?

21 June 2019 By Kate

Small Jar of Coins with Mini Graduation Cap Textbook Chalkboard in School

So, you’re ready to go to college, either as an adult or a college-age student. Either way, you may need a bit of help to help pay for the total cost of your education. During your research, you’ve likely come across options for both financial aid and student loans. You may have asked yourself, “Is financial aid the same as student loans?” Let’s compare financial aid vs student loans.

Breaking Down Financial Aid

You’ve more than likely heard of the Free Application for Federal Student Aid. By filling out the FAFSA, you can discover scholarships and grants you qualify for to help you pay for school. The great thing about the opportunities you can discover via FAFSA is that they can help you save a lot of money and get into your school or program of choice without financial worry.

Something else to think about with FAFSA is that you can send the data you share on your application to schools you wish to apply to. What this sharing of information does, besides saving you time, is help schools determine whether you qualify for some of their student funding.


A grant is a type of financial aid. It’s essentially gift money given to you by the state or federal government, a university/college or a private entity. Because the money is a gift, you do not have to pay it back. In most cases, you’ll have to meet a specific need the grant seeks to help with, such as being a person of color with the desire to study a specific subject who needs financial assistance to attend college.

You could find yourself nearly overwhelmed with the number of grants available to you. Apply to all of them, even if you have already been awarded a grant. You may be able to pay for the entirety of your college education with nothing but grants.


While both grants and scholarships are essentially a gift you don’t have to pay back, scholarships are often awarded on more than just financial need. Another difference between the two is that you’re highly unlikely to find a scholarship offered by the state or federal government.

So, what kind of scholarships are there? Several factors determine the foundation of scholarships:

  •      Academic merit
  •      Lifestyle
  •      Interests
  •      Athletic prowess
  •      Geographic location
  •      Field of study
  •      Ethnicity
  •      Extracurricular activities

While you can find plenty of scholarships and grants by filling out the FAFSA, it’s also a good idea to broaden your search. Ask your guidance counselor for leads. There are also online grant and scholarship databases you can research. Many colleges will have scholarships for high school seniors, but bear in mind they may have deadlines for when you need to apply by.

It’s also important to note that while you usually do not have to pay back grants and scholarships, they may come with caveats. For instance, if you go from a full-time student to a part-time student, you could lose your gift money. The same applies if your grades drop, or if you change your academic focus. Be sure to read the fine print and understand the stipulations before you accept a grant or scholarship.

Student Loans

Unlike the financial aid offered through scholarships and grants, you have to pay back the proceeds of a student loan; it makes no difference if that loan is a federal one or a private one. When comparing federal student loans with private student loans, it’s often best to exhaust your options for federal loans first. That’s because federal student loans often come with lower interest rates compared to private loans. That said, a single federal student loan may not cover the total cost of your education.

When it comes to private student loans, you have to bear in mind the fact that they often do not come with the fixed interest rates of federal loans. That means your interest rate and payment amount can suddenly shift for better or worse. Perform your due diligence before accepting a private student loan. Look into the lender’s reputation, what your repayment plan will most likely look like and the type of interest rate you can expect.

Repaying Student Loans

So, how long does it take to pay off student loans? That depends on a number of factors. Your other financial obligations, your current, and future debts, loan size, income, and lifestyle all impact how long it takes you to pay off a loan. You can’t predict what life will throw at you in the years to come, which is why you want your loans (and interest rates) to be as small as possible. The less you borrow, the easier time you’ll have to pay that amount back. In any case, it’s best to pay back as much as you can, as fast as you can. That way, you don’t accrue as much interest, which is essentially wasted money.

If you’d like more help understanding financial aid, reach out to us here at Pioneer Pacific College. We do our best to make paying for, enjoying and attending college as painless as possible.

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