Any person preparing to pay for an education may become confused about the differences between college scholarships and financial aid. While college scholarships and financial aid can both help pay for a college education, they are very distinct terms. College scholarships refer to grants of money for education offered by a school, government, or private foundations that do not need to be repaid. Financial aid covers a much broader range of educational funding, including scholarships, grants, and loans.
A college scholarship can help pay for some or all of the expenses of college. Scholarships are often used to pay for tuition, but some may cover the costs of books, housing, and living expenses as well. Since scholarships do not have to be repaid, they can reduce the tuition burden that students must meet through personal finances or other forms of financial aid, such as loans. Many students are encouraged to seek out scholarship opportunities, so that they can obtain an education without going into debt.
Financial aid, by contrast, comprises all sources of financing available to students. While these resources include scholarships, they may also include government student loans, private loans, fellowships, and grants. Since many students are unable to finance their education solely through scholarships, many do so through a combination of college scholarships and financial aid resources.
One feature that distinguishes college scholarships and financial aid is the grounds on which they are awarded to students. Scholarships are often given out on a basis of merit or personal characteristics. While some scholarships also take financial needs into consideration, they tend to place more weight on the individual characteristics of the student. Some forms of financial aid, such as government student loans, are based entirely on financial need and do not take merit into account. This means that students from wealthy families may be unable to receive some forms of financial aid, but may still be eligible for scholarships.
Another major difference between college scholarships and financial aid is the requirement of a repayment of funds. Scholarships, by definition, do not need to be repaid by the student, unless he or she fails to meet the requirements of the award. Some forms of financial aid, such as student loans, do require repayment of the borrowed amount, as well as interest payments for the life of the loan. Whether an offered award needs to be repaid may be an important consideration in a student's decision to accept or reject some types of financial aid.