Student Loans vs. Scholarships: What You Need to Know to Pay for College:
When it comes to paying for college, there are so many terms that it can be overwhelming and confusing. EFC, SAI, FAFSA, student loans, subsidized, unsubsidized—the list goes on. Sometimes, we take for granted the understanding of these terms, so I want to break down two major ones today: student loans and scholarships.
One of these we want to minimize, and the other we want to maximize. Make sure to join us on Telegram because every week, I share new strategies to help you avoid student loans and secure scholarships.
Did you know the average time to pay back student loans is 21 years? We don’t want students to get sucked into that. So far, we’ve helped families secure over $ millions in scholarships, and we’re not stopping there. Let’s dive into the difference between student loans and scholarships.
Understanding Student Loans
Student loans are money that must be paid back, often with interest. Depending on the type of loan, interest may start accumulating immediately or after graduation. There are three main types of student loans:
- Subsidized Loans: These are government-based loans where the interest does not start accumulating until after you graduate or leave college. This is the best type of loan if you have to borrow money.
- Unsubsidized Loans: Also government-based, but interest starts accumulating as soon as you borrow the money. You can choose to pay the interest while in school to avoid it piling up.
- Parent PLUS Loans: These are government loans that parents can take out for their child’s education. They can be dangerous because they allow parents to borrow large amounts, and the responsibility cannot be transferred to the student. If the student doesn’t pay, the parent is on the hook.
Private student loans are another option, but they often come with higher interest rates and less favorable terms. If you need private loans, we have a list of recommended lenders at Paddedvibez.com.
The Dangers of Student Loans
One of the biggest risks with student loans is accidentally borrowing more than you need. I’ve met students and parents who accepted loans without realizing they had to pay them back because they were labeled as “financial aid awards.” One family borrowed $113,000 thinking it was free money, only to realize later it was debt.
Another risk is co-signing loans. If a parent co-signs a loan, they are equally responsible for repayment. I’ve seen cases where students graduated, didn’t get a job, and stopped paying, leaving their parents to foot the bill. This can strain relationships and financial stability.
The Power of Scholarships
Now, let’s talk about the good stuff: scholarships. Unlike loans, scholarships do not have to be paid back. I secured six figures in scholarships, which means I got paid to go to college. How? The scholarships I received covered my tuition, and the leftover money was sent to me as an overage check each semester.
There are so many types of scholarships available, and they’re not just for valedictorians or elite athletes. Here are a few categories:
- Athletic Scholarships: Less than 2% of athletes receive full-ride scholarships, so this is a tough path.
- Merit-Based Scholarships: These are based on grades, leadership, or community service. You don’t need a 4.0 GPA to qualify.
- Institutional Scholarships: Offered by colleges and universities. Shopping around for schools can help you find ones that offer more money.
- Private Scholarships: Awarded by companies, organizations, or community groups. These can be based on anything from your major to your hobbies.
How to Find Scholarships
Finding scholarships doesn’t have to be overwhelming. Here are a few tips:
- Start Early: Look for scholarships as early as freshman year of high school.
- Use Multiple Sources: Don’t just rely on big scholarship search engines. Check local organizations, businesses, and community groups.
- Apply Strategically: Focus on scholarships that align with your strengths and interests.
I cover all of this in more detail in my free webinar, which you can access at Patreon.com/Paddedvibez. It’s about an hour long and will show you how to find scholarships that aren’t on the big search engines.
Need-Based vs. Merit-Based Scholarships
Scholarships can also be divided into two categories:
- Need-Based: These are awarded based on financial need. For example, the Pell Grant is a need-based grant that doesn’t have to be paid back.
- Merit-Based: These are awarded based on achievements, such as grades, leadership, or community service. You don’t have to be a perfect student to qualify.
Final Thoughts
Understanding the difference between student loans and scholarships is crucial. Student loans can trap you in debt for decades, while scholarships can help you graduate debt-free. At Paddedvibez, we’re here to help you maximize scholarship money and minimize student loans.
If you found this post helpful, make sure to subscribe below for more tips every week. And don’t forget to check out the free community on Telegram and whatsapp channel to learn more about finding and winning scholarships. Let’s work together to build a strong financial future for you and your family

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