Financial aid and student loans tend to differ in numerous ways. One of the most notable is that financial aid does not require repayment but student loans do. There may be more restrictions on maintaining financial aid, such as requirements to keep a certain grade point average. The requirements for eligibility also tend to differ for these two sources of funding. In many cases, student loans are the option that is most likely to cover all of a person's costs during her course of study.
Repayment is one of the biggest differences between financial aid and student loans. Financial aid is assistance that is provided from some source such as government grants or a student's employer. The student generally does not have to repay these funds. Student loans, as the the term implies, are funds that are provided with the understanding that they will be repaid. In addition to the amount borrowed, a student is also generally responsible for interest.
Grade maintenance is another common difference between financial aid and student loans. As financial aid is money that is given to help relieve the financial burden on students or to make secondary education possible in cases where it otherwise would not be, the providers of those funds tend to require students to maintain a certain grade point average. Individuals whose grades fall below the limit may lose their financial assistance. There may be other requirements, such as being enrolled in a certain number of credit hours per semester or avoiding disciplinary action. As student loans are funds that are generally provided to individuals for profit, the lending institutions do not generally impose these stipulations.
The qualifications for financial aid and student loans tend to differ. Many individuals turn to students loans because they are not eligible for other types of assistance. Financial aid tends to be for lower-income individuals or those with certain special circumstances, such as being single parents or having disabilities. Student loans, on the other hand, generally require a person to meet certain qualifications that mimic eligibility for other types of credit. This may include an established credit history and a credit-worthy co-signer.
Though it is not always the case, there is more possibility that there will be an award limit when dealing with financial aid. Providers of financial assistance commonly have a set amount that will be awarded to one student despite the costs of her education. With student loans, however, a person generally has more opportunity to request the amount that she needs to cover all of her costs. With some loans, it is even possible to finance the costs of living throughout the course of study.
