When you're planning for college, one of the biggest questions is how you will pay for tuition, fees, books, supplies, housing, transportation, and other education-related expenses. Financial aid may help eligible students manage those costs, but not every type of aid works the same way.
Grants and scholarships generally do not need to be repaid when the recipient continues to meet the award terms. Student loans are borrowed funds that must be repaid, usually with interest. Financial aid can also include Federal Work-Study, which is earned through qualifying employment, but this article focuses on grants, scholarships, and loans. (Federal Student Aid: Types of Financial Aid)
The distinctions matter. Two awards that appear similar on a financial aid offer may have different eligibility requirements, payment rules, renewal conditions, or repayment obligations. Understanding those differences can help you compare your options and decide which aid to accept.
Current-information note
Financial aid rules, award amounts, and institutional participation can change. This article uses 2026-27 federal information and current Campus disclosures as of July 2026. Students should confirm current requirements with the applicable agency, scholarship provider, lender, and school financial aid office.
Grants vs. Scholarships vs. Loans at a Glance
| Type | Usually Repaid? | How You Apply | Main Consideration |
|---|---|---|---|
| Grant | Generally no, but exceptions apply | FAFSA or a program-specific application | Eligibility, enrollment, award conditions, and available funding vary. |
| Scholarship | Generally no, if award terms are met | Provider-specific application; FAFSA may also be used | Deadlines, selection criteria, renewal conditions, and permitted expenses vary. |
| Loans | Yes, with interest and any applicable fees | FAFSA for federal loans; lender application for private loans | Compare total cost, limits, repayment terms, and borrower protections before borrowing. |
Individual aid programs may operate differently from this general summary.
What Is a Grant?
A grant is financial aid provided for eligible education expenses. Grants can come from the federal government, state governments, colleges, nonprofit organizations, or private sources. Many grants are based on financial need, but some use academic, service, program, demographic, or other eligibility criteria.
Federal grants generally do not need to be repaid, but repayment or a return of funds may be required in certain situations. Examples include withdrawing from school, receiving an overpayment, failing to begin attendance, or no longer meeting an award condition. The school will notify a student if federal grant funds must be repaid or returned. (Federal Student Aid: Grants)
For federal grants, the usual first step is completing the Free Application for Federal Student Aid, or FAFSA®. The FAFSA is the application for federal grants, Federal Work-Study, and federal student loans. States, schools, and some private aid providers also use FAFSA information. After admission and any required review, the school determines the specific aid it can offer; submitting the FAFSA does not guarantee an award. (Federal Student Aid: FAFSA)
Types of Grants
Federal Pell Grants. Federal Pell Grants are generally available to eligible undergraduate students who demonstrate financial need and have not earned a bachelor's, graduate, or professional degree, subject to limited exceptions. For the 2026-27 award year, the published maximum scheduled Pell Grant award is $7,395, and the published minimum scheduled award is $740. A student's actual award is determined under federal requirements and may vary based on the applicable Pell Grant calculation, enrollment intensity, length of attendance, lifetime eligibility used, and other eligibility factors. (U.S. Department of Education: 2026-27 Pell Awards)
Pell Grants generally do not need to be repaid, but a withdrawal, enrollment change, overpayment, or other eligibility issue can require funds to be returned. Students also must maintain satisfactory academic progress to remain eligible for future federal aid. Eligibility and award amounts are not guaranteed.
Federal Supplemental Educational Opportunity Grants (FSEOG). FSEOG is a campus-based federal grant for undergraduate students with exceptional financial need. Participating schools must first prioritize students with the lowest Student Aid Indexes who will also receive Pell Grants. If funds remain after those students are considered, the school may award eligible students with the lowest SAIs who are not receiving Pell Grants. FSEOG is not simply a universal first-come, first-served award, although a school may use application date within consistently applied selection categories. (2026-27 FSA Handbook: FSEOG)
The usual FSEOG range for a full academic year is $100 to $4,000, although an approved study-abroad award may be higher. Not every school participates, and each participating school receives a limited allocation. Students complete the FAFSA for each award year, not for each semester or quarter, and should confirm the school's selection procedures and deadlines with its financial aid office.
Teacher Education Assistance for College and Higher Education (TEACH) Grants. The TEACH Grant is a non-need-based federal grant for eligible students enrolled in a TEACH Grant-eligible program at a participating institution. Although the statutory annual maximum is $4,000, federal sequestration reduces the current adjusted maximum to $3,772 for the periods covering the 2026-27 award year. (Federal Student Aid: TEACH Grants) (FY27 Sequester Announcement)
A recipient must complete required counseling and sign an Agreement to Serve or Repay. The service obligation generally requires four years of qualifying full-time teaching within an eight-year period, in a high-need field, at a qualifying school or educational service agency serving low-income students. If the obligation is not completed, each applicable TEACH Grant may be converted to a Direct Unsubsidized Loan that must be repaid, with interest charged from the date of each grant disbursement.
Campus TEACH Grant notice
Campus does not currently participate in the federal TEACH Grant Program. This description is included only as general information about a federal program that may be available at other participating institutions.
State grants. States may offer their own grants with residency, financial, academic, enrollment, program, and deadline requirements. California offers Cal Grant A, B, and C awards through entitlement and competitive award cycles. Applicants generally complete the FAFSA or, when applicable, the California Dream Act Application and must satisfy current California Student Aid Commission requirements. Students should review the rules for the particular award type rather than assuming that all state grants are based only on financial need. (California Student Aid Commission: Cal Grant)
Pros of Grants
They generally do not need to be repaid. When recipients continue to meet the applicable conditions, grants can reduce the amount students must pay from savings, income, or loans.
More than one source may be available. A student may be eligible for federal, state, institutional, or private grants, although total aid remains subject to applicable cost-of-attendance, financial-need, and program rules.
They can reduce borrowing. Grant funds may cover part of eligible education costs, reducing the amount a student needs to borrow or pay directly.
The FAFSA provides one central federal application. One FAFSA is used for federal aid during an award year, and many states and schools also use its information. Additional documentation or separate applications may still be required.
They may expand access to education. Need-based grants are designed to help eligible students whose financial resources may not cover the full cost of attendance.
Cons of Grants
Eligibility is not guaranteed. A student must meet the program's eligibility rules, and some grants have limited institutional or state funding.
Not every school offers every grant. Campus-based programs such as FSEOG and the TEACH Grant depend on institutional participation and, for TEACH, program eligibility.
Awards may not cover all costs. A grant may cover only part of tuition or the broader cost of attendance. Students should review the full financial aid offer and remaining costs.
Eligibility can change. Enrollment changes, withdrawal, overpayments, failure to begin attendance, or loss of other eligibility requirements can reduce an award or require funds to be returned.
Satisfactory academic progress affects future aid. Falling below the school's SAP standards ordinarily affects continued eligibility for future federal aid. It does not automatically mean that every properly received prior grant must be repaid.
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What Is a Scholarship?
A scholarship is an award provided by a college, government agency, employer, union, community organization, nonprofit, foundation, or other provider to help a student pay eligible education expenses. Scholarships generally do not need to be repaid when the recipient meets the award terms, but a provider may require funds to be returned if the student becomes ineligible or does not satisfy renewal or enrollment conditions.
Scholarships can be based on academic achievement, financial need, talent, field of study, community service, employment, geographic location, personal background, leadership, military affiliation, or other provider-defined criteria. There is no single application or eligibility formula that applies to every scholarship. (Federal Student Aid: Scholarships)
Some schools use FAFSA information when awarding institutional scholarships, while many outside providers require a separate application, essay, recommendation, portfolio, interview, or other materials. Applicants should review the provider's deadlines, selection criteria, renewal conditions, and permitted uses before applying.
Types of Scholarships
Merit-based scholarships. These awards may recognize academic achievement, leadership, artistic talent, athletics, community service, technical ability, or other accomplishments. The provider determines how merit is measured and which qualifications are required.
Need-based scholarships. These scholarships consider financial need and may also require the applicant to meet academic, enrollment, residency, program, or other criteria. An award may reduce unmet need but does not necessarily cover the student's full remaining cost.
Program- or career-focused scholarships. Some awards are reserved for students pursuing a particular field of study, credential, or profession.
Community and affiliation scholarships. Local organizations, employers, unions, religious organizations, professional associations, and foundations may offer awards to members, employees, dependents, or residents of a particular community.
Student-background scholarships. Some providers establish lawful eligibility criteria involving life experiences, military service, first-generation status, adult-learner status, or other characteristics consistent with the provider's mission and applicable law.
The scholarship provider determines how funds are paid. Some awards are sent directly to the school, some are issued jointly to the student and school, and others are paid to the student. Eligible expenses may be limited to tuition and required fees or may include books, supplies, housing, transportation, or other education-related costs. Students should report outside scholarships to their financial aid office so the school can determine how the award affects the overall aid package.
Pros of Scholarships
They generally do not need to be repaid. Scholarships can reduce the amount students need to pay or borrow when they continue to meet the award conditions.
Many types of providers offer them. Opportunities may be available through schools, employers, community groups, foundations, professional organizations, and government agencies.
Criteria can extend beyond grades. Some scholarships consider financial need, work experience, community service, career interests, talent, or life experience.
Some awards are renewable. A renewable scholarship may provide assistance for more than one academic year if the student continues to meet GPA, enrollment, program, and other renewal requirements.
They may reduce future repayment obligations. Every scholarship dollar applied to eligible costs may reduce the amount a student must cover through income, savings, payment plans, or loans.
Cons of Scholarships
Awards can be highly competitive. Meeting the minimum eligibility criteria does not guarantee selection.
Applications require time and organization. Students may need to research opportunities, write essays, gather recommendations, and track multiple deadlines.
Requirements and permitted expenses vary. An award may be limited to a specific institution, program, enrollment level, or type of expense.
Renewal is not automatic. Some scholarships require continued enrollment, a minimum GPA, service, participation, or annual reapplication.
Outside awards can affect other aid. A school may need to adjust parts of a financial aid offer after receiving notice of an outside scholarship. Students should report awards promptly and ask how the funds will be applied.
Scholarship scams exist. Avoid providers that guarantee an award, charge questionable application or processing fees, or request sensitive financial information without a legitimate reason. Verify the organization before applying.
What Are Student Loans?
A student loan is money borrowed to help pay eligible education expenses. Unlike most grants and scholarships, loans must be repaid with interest and any applicable fees. The amount repaid can be significantly higher than the amount originally borrowed, depending on the interest rate, repayment period, and payment history.
Student loans generally fall into two categories: federal loans issued through the U.S. Department of Education and private education loans offered by banks, credit unions, state agencies, schools, and other lenders. Federal Direct Loans are generally the first loan option students should evaluate because they have fixed interest rates and federal repayment protections, but borrowers should compare all terms and accept only what they need. (CFPB: Choosing a Student Loan)
Federal loan eligibility and amounts are subject to the FAFSA, general student eligibility rules, at least half-time enrollment for Direct Subsidized and Direct Unsubsidized Loans, annual and aggregate borrowing limits, cost of attendance, other aid, prior borrowing, and any school or program-level limits. Federal loans are not guaranteed to cover the full cost of college.
Types of Student Loans
Direct Subsidized Loans. These federal loans are available to eligible undergraduate students with financial need. Interest generally is not charged while the borrower is enrolled at least half time, during the applicable six-month grace period, and during qualifying deferment periods. (Federal Student Aid: Subsidized vs. Unsubsidized Loans)
Direct Unsubsidized Loans. These federal loans are available to eligible undergraduate and graduate students without a financial-need requirement. Interest begins accruing when the loan is disbursed. Borrowers can pay accruing interest while enrolled or allow it to be added according to the loan terms.
Direct PLUS Loans for parents. An eligible parent of a dependent undergraduate student may apply for a Parent PLUS Loan. The parent, not the student, is the borrower. PLUS Loans require an adverse-credit review and have different terms from Direct Subsidized and Direct Unsubsidized Loans.
Private education loans. Private loans are issued under lender-specific underwriting standards. Interest rates may be fixed or variable, and eligibility, fees, cosigner requirements, repayment timing, hardship options, and borrower protections vary. Many borrowers need a cosigner, but not every lender or borrower situation is the same. Private loans generally do not provide the same repayment options and protections as federal loans.
Before using a private loan, students should complete the FAFSA, review grants and scholarships, compare federal loan options, and speak with the financial aid office. When comparing private loans, review the annual percentage rate, whether the rate is fixed or variable, origination or other fees, cosigner obligations, in-school payment requirements, repayment term, total projected cost, and hardship provisions. (Consumer Financial Protection Bureau)
Pros of Student Loans
They may help cover remaining eligible costs. Loans can help address part of the gap after grants, scholarships, earnings, savings, and other assistance are considered, subject to applicable limits.
Federal loans have fixed interest rates. The interest rate on a federal Direct Loan is fixed for the life of that loan.
Federal loans include borrower protections. Depending on the loan and borrower circumstances, federal programs may offer deferment, forbearance, income-based or other repayment options, and certain forgiveness or discharge provisions.
Subsidized loans can reduce interest costs. For an eligible borrower, the federal government generally covers interest during qualifying in-school, grace, and deferment periods.
Direct Subsidized and Unsubsidized Loans do not require a credit check or cosigner. Different credit requirements apply to Direct PLUS Loans, and private-loan underwriting varies by lender.
Funds may be used for authorized education expenses. Loan proceeds may be applied to allowable costs within the school's cost of attendance, such as tuition, fees, books, supplies, housing, food, transportation, and other approved expenses, subject to applicable rules.
Cons of Student Loans
They must be repaid. Borrowers are legally responsible for repaying principal, interest, and applicable fees even if they do not complete the program, are dissatisfied with the education, or do not obtain the employment or earnings they expected, unless a specific discharge or other relief provision applies.
Interest increases the total cost. Unsubsidized and private loans can accrue interest while the student is enrolled, and repayment may continue for many years.
Federal borrowing is limited. Annual and aggregate limits, cost of attendance, prior borrowing, enrollment intensity, and institutional or program limits may prevent loans from covering all remaining costs.
Private-loan terms can be less flexible. Private loans may have variable rates, fewer hardship options, and fewer statutory repayment protections than federal loans.
A cosigner may share legal responsibility. When a private loan has a cosigner, missed payments or default can affect both the borrower and cosigner.
Delinquency and default have serious consequences. Late or missed payments can damage credit. Federal default can also result in collection costs, loss of access to additional federal aid, tax refund offset, wage garnishment, or other collection activity, subject to applicable law.
Differences Between Grants and Scholarships
Grants and scholarships are both forms of financial assistance that generally do not need to be repaid when the recipient meets the applicable conditions. The terms are sometimes used differently by different organizations, so the award document controls. Common distinctions include:
- Eligibility. Many grants are based primarily on financial need, although some use service, academic, program, or other criteria. Scholarships may be based on need, merit, talent, field of study, community service, background, or other provider-defined factors.
- Funding source. Grants and scholarships may both come from federal or state agencies, schools, nonprofits, foundations, businesses, employers, unions, and community organizations. The label alone does not identify the funding source.
- Application process. The FAFSA is the application for federal grants and may be used for state or institutional aid. Scholarships often require separate applications, essays, recommendations, portfolios, or interviews.
- Payment method. Either type of award may be paid to the school, the student, or both, depending on the provider's terms.
- Renewal and conditions. Both grants and scholarships may have enrollment, academic-progress, program, service, or other requirements. Review the award notice carefully.
What's the Difference Between a Grant and a Student Loan?
A grant is financial assistance that generally does not need to be repaid, although exceptions apply. A student loan is borrowed money that must be repaid with interest and any applicable fees. Grants depend on program-specific eligibility and funding. Loans depend on borrower eligibility, loan limits, enrollment, cost of attendance, prior borrowing, and other requirements.
When comparing the two, consider not only how much money is offered but also whether the funds must be repaid, what conditions apply, when the funds will be available, and whether accepting the aid changes another part of the financial aid offer.
What's the Difference Between a Student Loan and a Scholarship?
A scholarship is an award that generally does not need to be repaid when the recipient satisfies its terms. A student loan is a debt that must be repaid with interest. Scholarships are often competitive and may have separate application or renewal requirements. Federal loans require the FAFSA and school certification; private loans require a lender application and credit underwriting.
A scholarship can reduce the amount a student needs to borrow, but students should report outside awards to their financial aid office. A loan should be evaluated based on the total amount borrowed, interest rate, fees, monthly payment, repayment term, and available protections, not simply the amount offered.
Campus: A New Kind of College, Built for Students
The team at Campus is committed to making high-quality college education more accessible. Our Financial Aid team can explain the FAFSA process, the aid programs Campus administers, the documents that may be required, and the components of a financial aid offer. Financial aid availability depends on the student, program, enrollment, prior aid history, available funding, and applicable federal, state, and institutional rules.
Campus is currently certified to participate in the Federal Pell Grant, FSEOG, Federal Work-Study, Direct Subsidized Loan, Direct Unsubsidized Loan, and Parent PLUS Loan programs. Campus is not currently certified for the TEACH Grant Program. Institutional participation does not mean that every student or every program is eligible for every type of aid.
Campus online degree courses are taught by faculty members, some of whom also teach or have taught at institutions including UCLA, Vanderbilt University, Stanford University, UC Berkeley, NYU, and Howard University. Faculty affiliations are based on verified current or recent teaching roles at the institutions listed. These references are provided for informational purposes only to illustrate faculty experience. Campus is an independent institution and is not affiliated with, endorsed by, or formally connected to the universities mentioned.
Students with questions about grants, scholarships, or loans can contact the Campus Financial Aid team at financialaid@campus.edu or review current disclosures and the Campus Catalog.
Financial aid disclosure
Financial aid is available to those who qualify. Eligibility is determined through the FAFSA® and other applicable requirements. Awards vary based on need, program, enrollment status, prior aid history, available funding, and applicable federal, state, and institutional rules. Campus does not guarantee financial aid eligibility, scholarship awards, award amounts, or loan approval.
Disclaimer
This article is provided for general informational purposes only and is not a guarantee of financial aid eligibility, award amounts, scholarship selection, loan approval, program participation, or funding availability. Financial aid rules and institutional offerings may change. Grants and scholarships generally do not need to be repaid, but repayment or return may be required in certain circumstances. Student loans must be repaid with interest and any applicable fees. Students should review current information from StudentAid.gov, applicable state agencies, scholarship providers, private lenders, the current Campus Catalog, and their financial aid office before making enrollment or borrowing decisions.
Sources
1. Federal Student Aid - Types of Financial Aid
2. Federal Student Aid - FAFSA Application
3. Federal Student Aid - Grants
4. U.S. Department of Education - 2026-27 Federal Pell Grant Maximum and Minimum Award Amounts
5. 2026-27 Federal Student Aid Handbook - Federal Supplemental Educational Opportunity Grant Program
6. Federal Student Aid - TEACH Grants
7. U.S. Department of Education - FY27 Sequester-Required Changes to Title IV Student Aid Programs
8. California Student Aid Commission - Cal Grant Programs
9. Federal Student Aid - Scholarships
10. Federal Student Aid - Student Loans
11. Federal Student Aid - Direct Subsidized and Direct Unsubsidized Loans
12. Consumer Financial Protection Bureau - Choosing a Loan That Is Right for You