International Student Blog

The Differences Between Scholarships And Loans


After an international student has been accepted into a study abroad program, one of the next steps is figuring out how said international student is going to pay for higher education.

Some international students pay for their schooling via scholarships, some students fund their schooling with loans and some students use a combination of both methods. Of course, some students already have enough funds saved up for school, they plan on working or they might receive help from friends and family members.

The point being, there are many different ways to pay for a study abroad program. However, scholarships and loans tend to be two very popular avenues for college students.

For the purposes of this article, we are going to focus in on study abroad scholarships and student loans. While there are many differences between the two, we are going to highlight three main differences below.

We encourage international students to use this information when they are in the process of figuring out how they are going to pay for their studies.

The Differences Between Scholarships And Loans

Scholarships Don’t Need To Be Paid Back

One of the main differences between scholarships and loans is the fact that scholarships do not need to be paid back and loans eventually do need to be paid back.

That is why study abroad scholarships are the best option when it comes to paying for higher education costs. This type of money is awarded to a student and said student never has to worry about paying it back.

However, that also makes them tougher to get. The competition for most scholarships can be rather fierce since so many people are trying to get them and since the standards/requirements are pretty high/intense. Nonetheless, scholarships are very appealing since it is essentially free money.

An Interest Rate Isn’t Attached To A Scholarship

Another major difference between scholarships and loans is that scholarships do not have an interest rate attached to them, and loans do.

With that in mind, the interest rate on some loans goes into effect while a student is in school. On other loans, the interest rate doesn’t take place until a student has completed his/her studies — it just depends on the nature of the loan and what type of loan it is.

Nonetheless, the interest rate alone is a big reason why many students shy away from taking out student loans. After all, over the course of a student’s studies, that interest rate can really increase the amount a student has to pay back, and that really becomes the case once a student is out of school and all of the loans need to be paid back and the interest is in full effect.


We encourage international students to apply for many different scholarships. While the larger scholarships in terms of money tend to be more appealing, the smaller scholarships can really help out as well, and they can also add up if you are awarded multiple ones. Plus, a student has nothing to lose when it comes to applying for scholarships.

Even still, an educational loan can help a student pay for his/her university costs, and an education loan could be the difference between someone studying abroad and someone not studying abroad. The key is knowing what you are signing up for and learning about loans for international students. You are not getting free money with a loan — it will eventually have to be paid back and an interest rate is attached.

Loans Are Based On Need, Scholarships Are Based On Merit

However, there are need-based scholarships/grants available. Either way, whether it is a need-based scholarship or a merit-based scholarship, the money doesn’t have to be paid back while the opposite rings true for student loans.

Which brings us back to student loans.

Loans are based on financial need and not merit/academics. That means the amount you receive in financial aid (for loans, in this case), or the amount you will be offered, is based on how much money you will actually need for your study abroad program. It’s not based on letters of recommendation, GPA, test scores or anything like that. It is solely based on how much money you actually need to study abroad.

There are many differences when it comes to scholarships and loans. The key is being able to distinguish the two and to also know if you need to pay back any money or not, which will only be the case for an education loan.

While scholarships are the more attractive choice for the reasons stated above, loans can still help a student acquire the necessary funds to study abroad.

To find out more information on the subject, we encourage prospective international students to check out this link.

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