The decision to go to college is not an easy one. Everyone deserves a higher education, but obtaining one can be quite difficult. Institutions for higher education tend to incur some very high costs, which is enough to stop many prospective students from even attempting to reach them. Consider the difficult situation many students in America face. They have to choose between being buried in enormous debt and forsaking a college education entirely. Even when they see success in their field, they have enormous debts leftover that bankruptcy can’t solve. Other western countries are a bit better in this regard, but higher education still requires a substantial financial investment.
However, there are three ways to solve this problem. Students that are not able or willing to immediately finance their college education can try to apply for student loans to help them enter. Those who would prefer to not pay at all can apply for any of the countless scholarships and grants that provide students with the means to reach that higher education. All of these options come with their benefits and drawbacks, and you must get to know them before choosing one. Here are some crucial pros and cons that you can expect from loans, grants, and scholarships.
Student loans cover all educational expenses
People often compare different kinds of school financing options as if they’re the same. Unfortunately, they differ in some very crucial aspects. Some of them, such as grants, might not provide you with adequate funding in specific parts of the school experience. They might grant you funding for a school year and certain critical educational expenses, but they also neglect others.
Student loans are great because they pay for all the different educational needs of the student. The loan covers anything that relates to classes and the school experience, which means that the student doesn’t have to worry about chipping in for anything essential for their diploma. All of the accompanying costs of education and living might not be covered, though.
There are different types of student loans from different sources. You can get a Federal student loan or a private student loan. Also, there is the interest on the loan to think about. Consider talking to a company like SoFi to help you find the right loan and interest solution to cover your education financial needs.
Loans Requiring Payment
All good things have to come to an end, university education included. Upon completion of their education, the bad part of student loans starts to kick in. They need repayment within a reasonable timeframe.
Repayment can put enormous financial stress on students once they enter the workforce. However, this depends on where and how you’ve acquired these loans. In the United States, mounting student debt is one of the most pressing matters for individuals that have started working in their desired field. Thousands and thousands of dollars have are owed, which means making payments for a very long time. Other countries are a bit more fortunate in this regard. The amount of debt is lower, and you’re able to negotiate smaller payments and debt forgiveness to some extent.
Repaying these loans could be made easier if they are part of a training program for students. Businesses like having educated professionals ready to work for them. Especially true if they’re fresh out of school and well-practiced. If a business has granted scholarships and loans to students that have shown great potential, this might mean more favorable payback options once they’ve started working.
Defaulting Harms Credit
Paying off loans is something every student needs to work on once they’ve finished their studies. However, life has many twists and turns, and people often end up with financial problems, which makes them unable to muster the necessary payments. In these scenarios, they might not be able to pay off the loan, in which case they end up in further problems.
Failing to pay it off leads to defaulting on the loan. If the student does not provide the payments that are dictated by the loan agreement, they automatically default on the loan — creating bad news for the student. The lender is then able to take legal action against them and find other ways to get their payments. Worse yet, the fees and interest begin to pile up, which puts the student in further debt.
All of this culminates with harm to the student’s credit score. When their credit score is low enough, they run into additional problems. It’s impossible to make any significant financial decisions or changes when your credit score is low, putting the student in an even worse position. Scores can only get worse on a day-to-day basis, which is why they need to act fast to recover their score. Very slowly, trying to pay off their debt is a good start. However, losing assets is a very real possibility in these scenarios. It’s a nightmarish consequence of not paying off debt at all costs.
Scholarships are a good deal
The concept of a scholarship is pretty simple. A student is given a large sum of money to help them fund their college or university education. This money is usually offered by a donor, organization, or the college itself. In some cases, a personal sponsor can give out a scholarship to the individual, but this blurs the line between scholarship and a gift.
As a form of funding, it’s not much different than a grant. There are few or no conditions or terms that might bind the student to the scholarship itself. It’s up to them how they’ll use the money that they’ve been granted. With no binding literature, it might as well just be free money. The key difference between a cash gift and a scholarship is that it has to be used for educational purposes. It’s a pretty good deal for anyone that wants to obtain a higher level of education but doesn’t have the necessary funds to do it on their own.
It’s pretty difficult to obtain a scholarship
Scholarships seem like the ideal form of funding for higher education, and they probably are. The only issue is that they’re ridiculously difficult to obtain. Getting approval for a scholarship requires that the student is exceptional in one way or another. There are several different kinds of scholarship that a student can receive.
A lottery scholarship is pretty self-explanatory. It’s no different than any other lottery, except the student receives college funding as a reward. It’s completely luck-based, and it doesn’t depend on any academic or athletic success. Income-based scholarships are a bit more complex. They are created to help offset inequality of income among potential students. Giving a scholarship to a low-income student is more likely to give good results than giving one to someone that can afford a college education. These might depend on a variety of other factors, which means that determining who gets the scholarship isn’t that easy.
Talent based scholarships are a lot harder to come by. They require the student to be top of their class in some shape or form. It’s usually granted to students that have shown exceptional academic success. However, talent in other fields is also an acceptable criterion for a scholarship. If the student is a star athlete, they’ll likely remain a star athlete throughout their college years. This can be beneficial for the university team that they’ll be placed in, especially if it’s a competitive sport.
When a student is seeking a scholarship, they need to research all the different types that they might be eligible for. Once they’ve figured it out, they also have to find out how to apply for these scholarships. Some additional difficulty lies in finding all relevant information and sifting through all scholarships that the student is not eligible for.
Scholarships aren’t flexible
It’s important to consider the purpose of the funding that you receive for college and university level education. For student loans, funding is given to pursue these institutions, but there’s no limiting factor that decides what kind of education has to be pursued. You are free to attend the university and course of your choice. The same cannot be said of scholarships.
Scholarships are rather inflexible when it comes to their purpose. A star student will be given a scholarship to attend a specific university. Alongside this, the scholarship will also very likely include a specific course for the student. In some scenarios, they might even be given a few courses to choose from, as long as they’re in a similar field.
This lack of flexibility limits the potential of the student to choose their own higher education. If they are not interested in a specific field, the scholarship isn’t going to be the most attractive option, even if it significantly reduces the cost of education.
Grants are straightforward
The concept of grants is pretty straightforward. Students that require financial help to pursue education are given a sum of money that will help them reach their desired goals. They can come from a variety of sources, and they are often used to fund student projects abroad. Occasionally, they’re also given to students that are otherwise unable to go to college or university.
Federal and state governments often give grants for very specific purposes. If there are openings in a highly-specialized kind of college, having more qualified students studying, there would be very beneficial. These grants share many of the benefits that scholarships have. They don’t have to be paid back, and they help students without putting them in any financial risk.
Finances limit Grants
Not everyone is eligible for a grant. The deciding factor is the financial status of the student. Grants for college are given to students that are in a difficult financial situation and aren’t otherwise able to finance their education. This means that students from lower-income families are prioritized.
Obtaining a grant can be extremely difficult if a student is somewhat well off. Even if they are struggling financially, the student might not be eligible for a grant for their education. Several different factors are considered.
The difficulty of obtaining a grant is one of the reasons many students just don’t bother with applying. You have to submit your financial records in detail and hope that this will produce positive results. It’s a lot more complex than simply applying for low-interest personal loans, which can be granted to just about anyone. This is why a lot of students prefer to stick with loans, as they guarantee that they’ll get into their desired institution.
Grants are flexible
One of the great benefits of grants is that they aren’t necessarily a one-off deal. If the student shows promise or if they’re in a particularly difficult situation, they can receive additional benefits. Sometimes, this can be in the form of additional payments. Nothing is stopping a student from applying for several different grants.
This can be a blessing for students that wish to excel in their chosen institution. Grants are necessary for doing expensive research, and they can help students reach new heights. As long as the benefactor deems it necessary to provide further funding, the student can receive multiple grants for their higher education. Considering that they don’t have to be repaid, multiple grants can be used as a great incentive for star students to excel at their work. It’s as much of a reward as it is an incentive.
These financing options help students get the education that they deserve, which is why they are so popular nowadays. Many young individuals see the value of higher education, and they wish to educate themselves to increase their chances of success later in life. Despite many of their shortcomings, these options have helped millions get into institutions that they otherwise might not have been able to afford. The only problem is picking out the right one. Students must get to know every single one of these financing options before making their decision. It could have a significant impact on their life, which is why it’s good to stay prepared.