Grants vs. Loans

If you are planning for a school/college education but do not have the required funds for pursing it, then grants and loans from government and private organizations can come in handy. However before applying for a grant or loan, one must understand the difference, pros and cons of both of them.

 What are Grants?

Grants: Grants are actually free money offered from the government, non-profit organizations and private foundations. Since they are free money, a student is not required to repay it. There are many programs for student grants made available by the government and private organizations. Government offers student grants in the form of competitive exams called discretionary grants, student grants for eligible and needy students like the very popular Federal Pell Grants and FSEOG and through formulas that are allotted to agencies by the Congress. However for being eligible to obtain student grants, a student has to complete the FAFSA, as it determines the need of the student for the grant.

 

The federal Pell grants are the most preferred student grants. Pell grants are generally offered to undergraduate students of low-income families. Completing the FAFSA is a must and meeting the eligibility criteria is a must. The amount of grant offered depends on the income and schooling needs of the student planning to attend a particular college. Similarly the FSEOG is another popular federal student grant. However these grants are offered to only those students who are financially weak. A student eligible for FSEOG is also eligible for Pell grants.

 

Just like government grants, private institutions and non-profit organizations also offer student grants to eligible or very deserving students. However the application process and eligibility criteria for students grant offered by private organizations is different.

 

Grants are not offered only for students. The government as well as some private organizations offer women grants, minority grants, grants for disadvantaged, single mother grants, etc., basically for the advancement of the weaker section of the society.

 What are Loans?

Loans: Though grants are the most-preferred, getting a grant for education is difficult due the fierce competition. In case you are not eligible for a grant, you can still continue your studies by obtaining student loans. Loans unlike grants are not free money, as they need to be repaid with an interest fee.  The government as well as private organizations offer loans to students. Student loans offered by the government levy less interest rate, which help students, repay the loan amount gradually. There are different student loans offered by the government, out of which Federal Perkins loan is the most popular. At an interest rate of 5% and repayment up to 10 years, the Federal Perkins loan is quite helpful for undergraduates.

 

Besides the government, many private institutions like banks offer student loans. Smart Option Student Loan and Chase’s Select Private Student Loan are good student loans with good repayment option. In fact student loans are offered by a number of private organizations. One needs to check carefully to know about them.

Housing Grants

The federal government issues special funds for housing needs. Of these, grants to buy a house are the most popular. It fulfils people’s hopes of finding a place to live. Apart from this, other Housing Grants include house repair grants and rental support grants. Both these help the low-income groups come up with affordable housing solutions.
It is not necessary that those who live in houses have money to repair or renovate them according to requirements. In these cases, other Housing Grants come into action. Home repair funds help these people mend a broken roof or raise a protective wall around their residence. Often those who have suffered house damage due to natural or manmade disasters, claim these grants to renovate their homes, either completely or partially, as the grant money permits.
Other Housing Grants are those connected with helping people with rent issues. Rental assistance is a big support to families living dangerously close to poverty line. The department of Housing and Urban Development, commonly known as HUD looks after the disbursal of these grants to eligible citizens. Although the entire rent is paid by the federal state, whatever percentage of the monthly rent is given is usually a huge relief for the families. This take into account the person’s housing needs, the location, house dimensions, and other financial conditions. Economic liabilities and fixed or liquid assets, if any, are considered.
One of the best things with house purchasing and other Housing Grants is that the receiver gets to receive the money as long as he or she or the family resides in that location. It is almost always a life-long benefit. Not many move out and have their grant history rechecked for fresh disbursal.
The problem with other Housing Grants is that these take an awfully long time to come about. Homeless or those unable to pay rent for a long time stay within the risk of being displaced. Too much paperwork and too many reviews often tire out the seeker. However, these are required for other housing grants since many do not shy away from misusing these.

Federal Pell Grants

Federal Pell Grants are free student grants given to undergraduate students. Sometimes due to financial constraints, a student might not be able to complete her education or earn a professional degree. Also, there are situations where a student is unable to meet regular economic expenses for education. In these cases, the federal government issues monetary assistance to students so that they are able to continue with their higher education plans.
This grant is only available to those who have not yet earned a bachelor’s degree. Any one lacking in professional degree also can avail Federal Pell Grants. Similarly, if students are undergoing any certification course in teaching program after graduation, they are eligible for Pell grants. The benefit with Pell Grants is that once it is issued to the students, it paves the way for other government and private funds to flow to the students.
To receive these grants, a student needs to fill up grant application forms and wait for response. If the application is scrutinized and accepted, students receive intimation. How much money they are entitled to receive is determined by their total family income and how much they can pay. The amount is either sent directly to the college or deposited in the student’s bank account.
Although Federal Pell Grants are issued in the range of two to five thousand dollars, the actual money received by a student depends upon the academic year, the college, the course of study, and attendance record. The government decision is final. The amount might go up or down. Also, a student is not eligible to receive Federal Pell Grants from more than one college at a time. Besides, a full time student gets more than a part-timer. It is usually awarded once in an academic year.
The money allotted, must be given to the student by the college authority. There must be written documents about the grant received by the student. Colleges or universities must ensure that they reach the student’s account in time and must pay them their money either per semester, quarterly or every trimester. Federal Pell Grants do take some time in arriving, due to all the government verification of documents, yet these expose the students to other federakm state or private funding opportunities.