When it comes to paying for college or university, knowing about the different types of financial aid available is vital. This article will break down scholarships, grants, and student loans, explaining the ins and outs of each in terms of who qualifies, how they need to be paid back, and what benefits they offer. By understanding these details, you can take control of your money and confidently pursue your academic goals.
What are Scholarships?
What is a scholarship? Scholarships are essentially financial awards given to students based on different criteria, providing financial support for university without the need for repayment. These awards can be based on a range of criteria. Academic scholarships are based on academic excellence, while athletic scholarships are for students with exceptional sports abilities. Community service scholarships recognise students for their contributions to their communities. Need-based scholarships are aimed at students in financial need. Scholarships do not need to be repaid as it is a financial award.
What are Grants?
What is a grant? A grant is financial aid for a student to pay for university. Grants are typically provided by government agencies. In South Africa, the National Student Financial Aid Scheme (NSFAS) provides financial aid for students. This covers tuition, accommodation and allowances for books and meals. Other government departments may offer grants related to a specific field of study. Corporates may offer grants as part of their corporate social responsibility projects. Grants do not require repayment unless conditions, such as making good academic progress, are not met. Withdrawing from the programme without a valid reason may also lead to repaying the grant.
What are Student Loans?
Student loans in South Africa are a way for students to borrow money to pay for higher education costs. These loans need to be paid back with interest once you finish your studies. There are different types of student loans available, such as loans from the National Student Financial Aid Scheme (NSFAS) and private loans from banks. NSFAS loans offer low interest rates and repayments based on income. Repayment is linked to a student’s salary after graduation. Bank loans offer varying terms, rates and repayment options. These loans may have a higher interest rate than state loans. They often require a co-signatory. Getting student loans can have a big impact on your finances in the long run. They help you pay for school right away but you need to think about how you'll pay it back after you graduate. If you borrow a lot of money or have high interest rates, you could end up with a ton of debt that makes it hard to stay financially stable, maintain good credit, and reach your future money goals. It's important to know the terms of your loan, look into different ways to pay it back, and budget wisely to handle your repayments responsibly.
Comparing Scholarships, Grants, and Loans
To make an informed decision, students must compare the different available options. Here’s a useful breakdown:
- Scholarships
- Eligibility requirements: often merit-based (academic achievement, talent, community, financial need).
- Repayment terms: generally does not require repayment.
- Application process: usually involves a motivational essay, proof of merit and letters of recommendation to scholarship provider.
- Impact on future finances: helps reduce the cost of university. There is no debt to be repaid.
- Grants
- Eligibility requirements: mostly need-based.
- Repayment terms: generally does not require repayment.
- Application process: application made directly to the funder such as NFSAS.
- Impact on future finances: a debt-free solution to pay for university.
- Loans
- Eligibility requirements: a credit check and often a co-signer.
- Repayment terms: must be repaid after graduating.
- Application process: an application made directly to the bank or lender such as NFSAS.
- Impact on future finances: borrowed funds must be repaid with interest
How to Decide Which Financial Aid to Pursue
When deciding on the right financial aid to pursue, it's important to first evaluate your personal financial needs and educational goals. Consider how much funding you need, your family's financial situation, and potential income during and after your studies. Research and apply for scholarships and grants early, focusing on opportunities that match your achievements and financial need. Carefully review loan options before borrowing. Prioritise non-repayable aid like scholarships and grants, and strategically combine different types of aid to cover your educational expenses.
Common Mistakes and Misconceptions
To understand the misconceptions about student financial aid, you must understand the difference between bursary and scholarship and ask questions such as how does a bursary differ from a student loan? Even simply search on Google: study loan meaning or bursary vs scholarship. You must do your homework.
There is a misconception that scholarships are only for top academic achievers. That is not true. Scholarships can be awarded to students who excel at sport, engage in community services or show exceptional leadership qualities. Grants are not the same as scholarships. Grants are usually need-based. Another common mistake is believing that student loans are free money. Loans must be repaid with interest. Scams also exist when applying for financial aid. Read terms and conditions carefully and always approach trusted sources.
Knowing the difference
Understanding the differences between scholarships, grants, and student loans is key when it comes to figuring out how to pay for university. Not taking the time to research and familiarise yourself with all the options and criteria puts you at a distinct disadvantage when seeking financial help to study. Rather put the work in, carefully plan your payment strategy, research your options, apply early, and seek advice from financial aid experts best placed to help.
About The IIE’s Varsity College
The Independent Institute of Education (The IIE) of which Varsity College is a brand, is South Africa’s largest registered and accredited private provider of higher education. At Varsity College we understand that no two students are the same or learn the same. That’s why we make sure a student’s education is shaped around them; how they like to learn, what they are passionate about, what makes them tick, and what makes them thrive. Our Education by Design approach allows students to grow into their best, and creates a space where they can live, learn and play – their way.