Scholarships: A Superior Alternative to Student Loans for Funding Education
Many students and their families grapple with the question of how to finance higher education. Scholarships and student loans are two primary options, each with distinct characteristics. Understanding the differences and benefits of each is crucial for making informed decisions.
Understanding Scholarships
A scholarship is a monetary award specifically designated for education-related expenses. Eligibility for scholarships depends on the individual scholarship program. Awards can be based on merit, talent, academic performance, financial need, or specific career goals. Scholarships are available through schools, private businesses, foundations, and nonprofit organizations.
Repayment Terms
Typically, scholarships do not need to be repaid, as they are considered financial gifts rather than loans. However, some scholarships have conditions that, if not met (e.g., failing to complete your degree), may require repayment. Grants are similar to scholarships as they also do not need to be repaid.
Eligibility Criteria
Eligibility for scholarships is based on the specific scholarship program. Some scholarships are merit-based and awarded to those who demonstrate academic ability or talent. Others are based on financial need or geared toward specific career goals.
Advantages of Scholarships
One of the biggest advantages of scholarships is that you get to keep the money you receive; there is nothing to pay back. An additional bonus is that winning a scholarship feels pretty good!
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Disadvantages of Scholarships
Any amount you’re awarded can affect your financial aid package. Scholarships are also very competitive. Students may spend a lot of time filling out applications and writing scholarship essays.
Understanding Student Loans
When you take out a loan, the expectation is that you will pay the money back. For a private student loan, you’ll need to prove your creditworthiness. Your creditworthiness is what reassures lenders that you can repay what you borrow. To assess this, lenders look at criteria like income and credit history.
Repayment Terms
In addition to paying back the amount you borrow, you will need to pay interest on that amount. Interest is essentially the cost of borrowing money and is calculated as a percentage.
Advantages of Student Loans
While it’s never fun to owe money, it does help you establish a credit history.
Disadvantages of Student Loans
In addition to paying back the amount you borrow, you will need to pay interest on that amount. Interest is essentially the cost of borrowing money and is calculated as a percentage.
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Why Scholarships are Better
Reduced Financial Burden
According to U.S. News & World Report, the average college student graduates with about $30,000 in student loans. That’s nearly a 25% increase from a decade ago. Many of these student loans carry high interest rates and create a severe financial burden for young professionals. In contrast, scholarship programs can help students afford college without strings attached. Scholarships are an incredible source of financial assistance for college students. Unlike loans, scholarship funds are free money. That means you don’t have to pay them back over time - an assurance that can vastly reduce financial stress and help you focus more on your studies. Financial aid and student loans are excellent sources of support, but college scholarships are one of the best ways to reduce the debt burden associated with pursuing higher education.
Targeted Support
These days, many scholarship opportunities target communities that haven’t historically had access to higher education. These include students from communities of color or families with lower household incomes. Some of these scholarship programs fund students to attend a college of their choice. Others seek to support underrepresented communities in specific fields of study.
Enhanced Academic Focus
For many students, the only way to afford college tuition is to work a side hustle during the school year. Whether a federal work-study job or a part-time off-campus gig, employment can impede a student’s ability to focus on their studies. Scholarship recipients, on the other hand, experience some relief from that burden.
Affording Necessary Tools
Tools like notebooks, tablets, laptops, and study materials can help you take your education to the next level - but they’re not always cheap. Fortunately, many scholarship programs exist to help college students afford these extras.
Networking Opportunities
Networking is a crucial part of career success in a number of fields. You’ve probably heard someone say, “It’s not what you know, but who you know” when it comes to getting job opportunities. Many programs connect scholarship recipients to mentors, conferences, and professional development programs. These types of professional membership groups can help young students learn about a career in their field and make valuable industry connections. Many scholarship providers are private companies seeking to identify the next generation of talented young professionals. These types of scholarships can help you find fulfilling internships in addition to mentors and industry insights.
Read also: Good Grades Scholarship Guide
Community Engagement
While many scholarships are need-based or select winners based on academic achievement, others prioritize community service. A number of nonprofit scholarship providers want to hear about your public service, the work you’ve done for your community, or the social issues you care about solving.
Athletic Pursuits
Athletic scholarships can be hard to come by. Fortunately, various scholarship opportunities exist to help young athletes pursue their passion, whether or not they play on an official school team.
Recognition and Prestige
Money shouldn’t be the only motivation for filling out scholarship applications. Many merit-based scholarships are prestigious. They require a high GPA, good writing skills, and some level of academic achievement - all of which signify your capability and academic prowess to future employers. Winning scholarships is about more than just earning money for school, and they don’t have to be hard to apply for either.
Examples of Scholarship Programs
- The Chick-fil-A Community Scholarship: Prioritizes students who have a track record in serving their community. Scholarship recipients will be invited to join a year-long leadership development program. This optional program offers mentorship and professional development training that focuses on a broad array of leadership skills.
- The Astronaut Scholarship: For students interested in pursuing a career as an astronaut and want to gain access to a community of professionals in the industry. This award is given to students entering their junior or senior year of college. Winners will also receive an all-expenses-paid trip to ASF’s annual innovation conference, which is a great opportunity to network.
- Google Scholarships: While the award is open to students of all genders and racial identities, Google strongly encourages students from historically underrepresented groups to apply.
- The Hewlett Packard Enterprise Scholarship: A prestigious private scholarship with internship placement potential. It’s a two-year, needs-based award, and it’s sponsored by the Executive Leadership Council (a non-profit organization committed to the advancement of Black executives) and leading computer manufacturer Hewlett-Packard. The scholarship is given annually to five rising college juniors.
- The Southern California Edison Scholarship: Recognizes the importance of innovation. To win the scholarship, applicants must demonstrate financial need and live in a Southern California county that’s serviced by Edison.
- The Johnson & Johnson Scholarship: Represents both a commitment to social issues and an opportunity for professional development via an internship. To apply, students will write an essay about promoting health equity for communities of color and the role they hope to play in that outcome. This scholarship opportunity is need-based.
- The 9/11 Promise Scholarship: Gives out awards ranging from $5,000 to $15,000 to the children of deceased first responders. To apply, you’ll need to write an essay about what you learned from the public service of your parent and how this scholarship will help you achieve your career goals.
- The Native Forward Scholars Fund: Sponsored by clean-energy company NextEra Energy, aims to empower the next generation of Native American scholars. If you want to protect the earth and its resources while exploring new methods of producing clean energy, consider applying. The award provides financial assistance to 15 Native American students each year.
- The Scott and Kim Verplank Foundation Scholarship: An athletics scholarship founded by Scott Verplank, a professional golfer on the PGA tour who was diagnosed with Type 1 Diabetes at an early age.
- The National Federation of the Blind Scholarship: Runs a specialized scholarship program to advance academic opportunities for blind students. The award amount varies, but each scholarship will be in excess of $3,000. The federation gives out 30 awards each year.
- The Society of Manufacturing Engineers Scholarship: For students pursuing a career in engineering, represents an excellent opportunity to gain access to a professional network and earn scholarship funds at the same time.
- The Mentoris Project Scholarship: Applicants must read a Mentoris book of their choice and write an essay about the main character.
- The Wilhelmina Pittman Textbook Scholarship: A great option for Florida students who might otherwise struggle to cover the cost of educational supplies. Created by a Florida State University graduate who struggled to pay for his textbooks as a student, this award is open to any student with financial need attending school in Florida.
- The BigSun Athletics Scholarship: Applicants can participate at any level of athletics and in any sport. The only application requirement is an essay.
- The Union Plus Scholarship Program: Eligibility extends to current and retired members of participating unions, their spouses, and their dependent children (as defined by IRS regulations). The program evaluates applicants based on academic ability, social awareness, financial need, and appreciation of labor. Award amounts range from $500 to $4,000.
How to Find and Apply for Scholarships
When it comes to finding scholarships, your high school or college can be a great place to start. An advisor can help you determine what national and local scholarships are available to you. The Internet, of course, is also a terrific tool. Because each scholarship is unique and has its own criteria, it’s important to follow directions carefully for each. For instance, some scholarships may require an essay along with an application.
Resources for Scholarship Searches
- Going Merry: A one-stop shop for scholarships-- allowing students to find and apply for scholarships, right on our platform. You fill out a profile, get matched to scholarships you're eligible for, and then can filter or favorite scholarships into an application shortlist. Then, when you're ready to apply, our platform auto-fills any information you've already told us, so that you never have to answer the same thing twice.
- College Ave: Offers a $1,000 monthly scholarship sweepstakes.
Other Forms of Financial Aid
It’s best for students to apply for all types of college financial aid including grants, scholarships, and student loans. You’ll likely use a combination of scholarships, grants, and loans to pay for college.
Grants
Grants are similar to scholarships in that they do not need to be repaid. Eligibility for scholarships is based on the specific scholarship program. Some scholarships are merit-based and awarded to those who demonstrate academic ability or talent, while others are based on financial need or geared toward specific career goals. To apply for a federal grant, you’ll need to fill out the Free Application for Federal Student Aid - or FAFSA. The process is free and simple, and all college students are encouraged to complete one to determine their eligibility for financial aid.
Federal Student Loans
Students are generally eligible to borrow up to a capped amount of federal aid each semester. While many students benefit from federal student loans, some students may find the amount of aid they’re offered doesn’t always cover what they need.
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