Defintion: a grant is a kind of financial aid that you don't have to pay back (aka Gift Aid).
Federal and state governments are sources of gift aid.The federal government is the largest source of need-based gift aid, primarily in the form of the Pell Grant.
State governments often fund grants and scholarships for residents attending state colleges. Many colleges offer grants and scholarships to their students. These may be merit or need based, or a combination.
Colleges may be stricter requirements for keeping a scholarship than do other sources of scholarships.
Many companies, foundations, community organizations and clubs sponsor grants or scholarships. Grants and scholarships from these private organizations are called outside, or private, scholarships.
Here are some examples of possible sources of outside scholarships: your parents’ employers or labor unions, your family’s religious center, and other organizations
Defintion: A loan is borrowing money that you have to pay back with interest. Some federal loans let you defer — or delay — paying the loan back until after you graduate.
Interest: The interest rate is the cost of borrowing money, and is usually a percentage of the loan that is added to the amount you borrow. The higher your interest rate, the more you'll owe over time.
Need-based: Aid that is need-based is awarded to students who are determined to have financial need; that is, the amount they are able to pay for college is less than the cost of attending the college.
Federal Direct Subsidized Loans are interest-free while you're in college and have a borrowing limit that increases for each year of school you complete.
Non Need-Based Loans: Federal Direct Unsubsidized Loans charge interest, but allow you to add the interest fees to the amount you borrow until after graduation. However, doing this means you’ll actually end up owing more. Federal Direct PLUS Loans allow parents (or graduate students) to borrow the total cost of college, minus any financial aid received.
Subsidized: Some federal loans are subsidized, which means the government pays the interest on the loan while you're in college.
Private Loans: are not subsidized or need-based. They often require a cosigner — someone who promises to repay the money if the student fails to do so. The interest rates of private loans vary. Banks and other financial institutions usually have the highest interest rates. Some private organizations, foundations, and colleges offer lower interest rates.