Scholarship or Student Loan: What are the Advantages and Disadvantages of Both?



Scholarship or student loan: Which one is best for your needs?


In this article, first, we look at the scholarship. We’ll find out what a scholarship is, then we assess the advantages and the disadvantages of obtaining a scholarship for college/ university.


Next, we focus on how the student loan works and its pros and cons.



What is a Scholarship?


The scholarship, which is offered by a variety of institutions and organizations – schools, businesses, community organizations, non-profits, and others – provides financial support to students.


Typically, scholarship approval is dependent on student merit. Nevertheless, frequently, there are alternative factors for eligibility.


Eligibility factors may include age, race, sex, grade-point average at high school, nationality, and much more.


The general rule is that scholarships are only available for specific areas of study, or for specific levels of study. 


Some scholarships offer financial aid to cover any and all educational-related costs. Other scholarships may be available to cover the costs of tuition only or some other aspect of the course.


For almost every scholarship there’s a limited time available for application.


What’s more, every scholarship caters to a limited amount of funds, whether on an annual basis or on a  one-off basis.



What are the Advantages of Scholarships?


1  A scholarship is “gifted” money. In other words, there is no requirement to pay any scholarship award back.


2  There’s no discrimination in terms of who is awarded a scholarship. Scholarships are open to people from all walks of life. 


3  Successfully obtaining a scholarship help a relatively “fledgling” resume to stand out.




What are the Disadvantages of Scholarships?


1  Scholarships cater to particularly selective programs and are limited in this way.


2  For many scholarships, more so the ones offering larger sums of money, there’s very stiff competition from other would-be students.


3  For the most part, if you obtain a scholarship, you must maintain relatively high grades throughout each semester.


4  Scholarships do not permit the same level of spending flexibility that student loans do.





What is a Student Loan?


Student loans are given to students as a way to pay for expenses that are educational in nature. Student loans can be used to pay for typical day-to-day expenses. 


The expenses can include college tuition through to living expenses (rent, utilities, etc.), to books. 


The main difference between a student loan and a scholarship is that a student loan, as the name suggests, must be paid back.


Unlike most other types of loans, student loans attract a very low rate of interest. 




What are the Advantages of Student Loans?


1  You can use a student loan to cover any type of expense.


2  Any student or prospective student can apply for a student loan. Obtaining a student loan is far easier than obtaining the majority of other types of loans. 


3  When the loan is paid in a timely manner, they can help to build credit.




What are the Disadvantages of Student Loans?


1  Unlike a scholarship, a student loan must be repaid.


2  If you default on a student loan it will have a negative impact on your credit.


3  For many, a student loan is a large burden that can cause persistent stress over many years. 



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