Difference Between Similar Terms and Objects

Difference Between Grant and Loan

Grant vs Loan

The government, financial institutions, and private entities offer financial aid to other governments, businesses, organizations, and individuals such as students, researchers, or educators to help them fund their businesses, projects, education, and other endeavors. These are given out in the form of grants and loans.

A grant is an amount of money given by the government or by a private entity to finance a cause or a person. It is economic aid from one government to another or to a project that will benefit the public. It is also extended to students to help them finance their studies. It does not have to be repaid, but it has many requirements, and students have to meet them to qualify. Two types of student grants are the federal need-based Pell Grant and the Teacher Education Assistance for College and Higher Education which is not based on income but requires that recipients teach in a school for low-income students after graduation.

There’s a lot of competition for grants, and students who apply are screened according to gender, income, and other restrictions of the institution which gives the grants. There is also a specific amount of money that a grant offers, and it sometimes cannot pay for the overall cost of education which is different from a loan wherein one can apply for any amount.

A loan is an amount of money given by a financial institution, such as a bank or a government or private agency, to a business or an individual which has to be repaid within a specified period and which bears interest. It is a common transaction between banks and businesses but is also extended to individuals, such as students, who do not have the capabilities to support their education. Although it is also interest bearing, the interest rate is lower than other types of loans.

The repayment schedule is also different because it is deferred until the student is no longer in school. There are three types of student loans; federal subsidized loan, federal unsubsidized loan, and the private student loans. Loans are easy to acquire and have less competition. In order to obtain it, the student’s and his parent’s financial status are considered especially if he applies for a federally funded loan. Student loans from other entities have less stringent requirements.


1.Both grants and loans are given to students in order to help finance their education. While grants don’t have to be repaid, loans have to be repaid after the students finish their education.
2.Grants are hard to acquire because there are many students who apply for them while loans are easier to get because they are debts that need to be repaid.
3.Grants have more stringent requirements, and each applicant is carefully selected while loans require less from applicants.
4.A fixed amount is given to students who obtain grants while they can get any amount when they acquire a loan.
5.A loan is interest bearing while a grant is not.

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