What’s the Difference Between Scholarships, Grants, and Loans?

Posted On August 22, 2022
student loans


Few matters more than finding the funding you need to further your education. However, searching for money to cover college or trade school is like walking through a labyrinth. Yes, scholarships, grants, loans, work-study, and other opportunities are everywhere, but what’s the difference between them? Which funds do you need, and what do they cover? Will you need to repay the money you receive?


We understand how challenging preparing for college is. So, we’ve pulled together our resources to bring you the answers to these questions and more.



A scholarship is a financial gift. You do not need to repay it. While most scholarships are a one-time gift, some are renewable each semester or year.


There are many ways to find scholarships. Start with your school. They often point you toward the resources you need to start your search. Other searches include private and government scholarship search engines. Scholarship websites might email funding opportunities based on your profile information, educational goals, financial need, grade point average, and more.


Beware of scholarship scams, though. Scholarships are not prizes; you do not need to send money to apply for them. Scholarships also are not guaranteed. 



Similar to scholarships, grants are gifts, and you do not need to pay them back. Most grants are government-funded and based on financial needs. However, federal agencies also award grants for merit, academic ability, and competitiveness. Some grants are only available to students with specific majors, of a particular background, with certain interests, or who meet other criteria. You’ll still need to complete an application as you would with a scholarship. 


Like with scholarships, watch for scams. There is no guarantee for grants, nor must you pay to apply for them. Grants are also not prizes you win. Beware of anyone who says you’ve “won” a grant or scholarship.


Student Loans

Student loans differ from the latter two funds because you must repay a loan, and loans carry interest. Nonetheless, since grants and scholarships rarely cover your educational expenses, loans offer an excellent alternative for funding gaps for tuition, books, supplies, class fees, or living expenses, especially if you plan to live on-campus.


You can apply for federal student loans using the Free Application For Student Aid. The FAFSA also determines whether you might be eligible for a government grant or a work-study program. You’ll need to re-apply each year. Federal student loan repayment begins once you graduate or within six weeks of the date your last class ends, whichever comes first.


There are two kinds of federal student loans: subsidized and unsubsidized.


Subsidized loans do not accrue interest while you are in school at least half-time or during any deferment periods.


Unsubsidized student loans accrue interest from the moment you accept the funds. So, you’ll need to stay on top of interest payments while in school, or they can quickly get out of hand.


Extraco Banks has teamed up with Brazos Higher Education to provide various student loan options to fit your needs. You can apply for them at your local branch office or online.


Interest rates depend on your credit history, but you or your parent will need at least a credit score of 680 and a minimum annual income of $45,000 for consideration. However, you can choose from fixed-rate or variable-rate loans.


Finally, Extraco Banks offers parent and grandparent student loans if your relative wishes to help. Graduate loans and specialty student loans for doctors, veterinarians, and law students are also available to help meet your needs.


The Final Word

Most students fund their education with scholarships, grants, and student loans. Still, if you need something more throughout the school year, here are a few last suggestions.

  • Campus jobs
  • Part-time work
  • Gig work
  • Employer tuition assistance


Most colleges and universities update a student job board throughout the year. It lists jobs on-campus and with off-campus sponsored companies. Some students prefer to find part-time jobs close to campus, while others perform gig work or create entrepreneurial opportunities.


When you need money throughout the school year, whether for tuition and fees, room and board, books and supplies, or other living expenses, there are no ends to the options available for determined, savvy students.