When discussions about paying for school or college begin, the terms “financial aid” and “scholarships” are often used interchangeably. In general, both methods help you pay for your college or school. However, there are many differences between financial aid and scholarships.

Scholarships are won by or given to students, and you do not have to pay back the given money. But financial aid is a different case. Some of the money is free for students to pay for their studies. However, student loans often bundled with financial aid packages must be paid back after graduation.

Main Differences Between Financial Aid And Scholarships

Financial Aid Scholarships
a) Financial aid is awarded based on your need a) Scholarships are awarded based on your merit
b) Financial aid is money to help you pay for career school or college b) Scholarships help you make career school or college affordable
c) Financial aid is also available for organizations c) Scholarships are only supporting individuals

Detailed Description Of The Differences Between Financial Aid And Scholarships

If you still have other questions about financial aid and scholarships, that is perfectly fine. Here is a detailed description of the differences between financial aid and scholarships:

  1. FINANCIAL AID

a. What types of financial aid are available?

There are several types of financial aid. Students might qualify for grants, which are free money that can be used to pay for college. However, this type of financial aid is given based on your financial need rather than merit. Grants can come from:

  • colleges
  • federal and state governments

Work-study is another type of financial aid that allows students to work part-time jobs where earnings cover college expenses. The job market is usually limited to campus, but the Department of Education is overhauling this program to include:

  • Internships
  • Apprenticeships 
  • Off-campus jobs 
  • Clinical rotations

Student loans are also financial aid, though it is debatable that you must pay them back after graduation. However, if you have a gap between what you can afford to pay for college and what college costs, student loans are a low-interest rate financing option. Students could borrow private student loans if federal student loans are insufficient to pay for college.

b. When to apply for financial aid?

FAFSA becomes available every year on October 1. It is usually the kickstart to the application process of financial aid. Students must complete FAFSA as soon as possible after the release date as most states award financial aid on a first-come, first-serve basis.

It means the earlier you apply, the greater your chances of getting the financial aid. FAFSA has a 20-month long application cycle, which means the due date is no earlier than June 30 of the following year. It is to your advantage to submit the application at least before your state’s FAFSA deadline. 

Many states encourage you to turn in the application as soon as possible, while other states do not have deadlines until early spring. Additional forms from colleges and states are due as soon as possible or in early spring. You should contact your financial aid administrator at the exact timing.

c. How to apply for financial aid?

Applying for financial aid is a little easier because you only need a few forms. The most important one is the Free Application for Federal Student Aid (FAFSA). In general, the FAFSA asks questions about your family’s financial situation to determine how much your family can contribute to a college education.

Your answers will be plugged into a formula that will determine your Expected Family Contribution (EFC). Colleges will be informed of your EFC, and they will design a financial aid package that will meet your needs hopefully. Your financial aid package is sent out sometime in the spring, and you can compare offers from all the universities to which you have applied.

Some colleges and states might require an additional form along with the FAFSA. The FAFSA is undoubtedly essential, but so are these forms. Do not forget to fill them out, as it can lead to fewer financial aid dollars. These additional forms:

  • ask more questions than the FAFSA
  • give families space to elaborate on the financial situation that is not so black and white
  1. SCHOLARSHIPS

a. How to qualify for scholarships?

Some scholarships have no specifications at all, and some have rigid qualifications like a perfect GPA. So, it is essential to read the fine print as each scholarship has different requirements. Scholarship committees aim to reward students who are:

  • Motivated
  • Interesting
  • Hardworking

Do not apply for every scholarship you see. Because it might be a waste of your time if you do not meet the requirements. You can apply for every scholarship you come across if you meet the requirements. The more scholarships you apply for, the greater your chances of winning one. You could ensure that you qualify for many scholarships by:

  • working hard in your classes
  • increasing or maintaining a perfect GPA
  • participating in several extracurricular activities and community projects

b. When to apply for scholarships?

You can apply for scholarships in the first year of high school and continue applying during your last year of school. It does not matter whether it is your final year of graduate school or your senior year of college. There is no fixed start or end date for it.

c. How to apply for scholarships?

There are several ways to apply for scholarships. Colleges usually award merit scholarships along with an admission decision. Admissions committees evaluate a student by taking into account their:

  • grades
  • school and community involvement

This evaluation determines a merit scholarship amount that will be awarded at the time when the students are notified of their acceptance. Students can easily search for scholarships by their:

  • Location
  • Intended majors
  • Extracurricular activities

Students can also ask their high school mentors, teachers, or guidance counselor about scholarship opportunities local to them.

The Bottom Line

While there are some big differences between financial aid and scholarships, they both serve the same purpose: to help you pay for college. You have to pursue both avenues to pay for your graduate college and tuition with minimum student loan debt.