Borrowing money to pay for school is one way to go to college and earn a degree; another is to qualify for a grant. There are several similarities and differences between college loans and grants. While both are used to pay for school, how they are received and how they are paid for are very different.

There are two main similarities:
Application
Students must apply for both grants and student loans. The bases of the grant application are generally academic performance and need. The lender of a private student loan is typically concerned with financial performance and need. While high school transcripts may be necessary for grant situations, they are rarely required for private student loans.

Use
When a student earns money for school, one of the biggest catches is how the money can be spent. Some grants and loans earmark the money for very specific purposes. In other cases, however, the use of the money is less stringent. As long as it is used for school-related expenses, the student can spend the money for college as they see fit.

There are three main differences:

Repayment
The biggest difference between a grant and a loan is that the student has to pay back the loan; the grant money does not have to be paid back. Most student loans are available at a low interest rate, which means the student pays back the amount of the loan, plus a percentage or money on top of that for every dollar borrowed until all of the money is repaid. Some require repayment to start upon graduation; others allow it to start sooner if preferred. Student loans are usually available through a private lender.

Institution
Whether a student qualifies for a grant often depends upon which school they attend and how much the tuition costs. Some grants also cover room and board or housing. Student loans are generally available regardless of the institution, and often depend upon a person's credit history whether or not they are eligible for the money. Some lenders may require the school to be accredited by certain educational foundations or associations.

Eligibility
Many grants hinge upon the eligibility of the student academically. Grants offered by private organizations or clubs in the spirit of a scholarship may have a variety of restrictions and eligibility requirements which must be met. Private lenders, however, are more concerned with the likelihood of repayment. This is often the driving force in eligibility for student loans. A parent may be required to assist in securing the money, although the student is primarily responsible for making payments.