Final answer:
Grants are financial aid that do not require repayment, while loans must be repaid with interest. Subsidized loans are need-based and interest is covered by the government while the student is in school, while unsubsidized loans are not need-based and accrue interest from disbursement until they are fully repaid.
Step-by-step explanation:
Differences Between Grants vs. Loans:
One of the primary differences between grants and loans is that grants are typically need-based financial aid that do not require repayment, whereas loans are borrowed funds that must be repaid with interest. Grants are often awarded by governments, educational institutions, or charitable organizations and target specific groups, projects, or individuals based on various criteria. Loans, on the other hand, can be acquired from various sources including banks, credit unions, and the government, and they require a repayment plan that includes both the principal amount and accrued interest.
Subsidized vs. Unsubsidized Loans:
Subsidized loans are a type of federal student loan on which the government pays the interest while the student is in school, during the grace period, and during any authorized deferment periods. These loans are available only to undergraduate students with demonstrated financial need. In contrast, unsubsidized loans are available to both undergraduate and graduate students regardless of financial need. The key difference is that borrowers are responsible for all the interest that accrues on unsubsidized loans, from the time the loan is disbursed until it is paid in full.