Both bursaries and student loans are forms of financial assistance which is designed to help individuals pursue higher education. However, they differ in terms of repayment requirements and/or terms, eligibility criteria, and how the funds are provided. This article aims to discuss the differences between a bursaries and student loans.
According to BudgetGist (2022), a bursary is a financial award granted to students based on developing the academic pursuits. The granting of a bursary involves various criteria, such as academic achievement, financial need, household income levels, demographic prerequisites, or specific talents. Funding may cover tuition fees, accommodation, living expenses, textbooks, and study tools. In addition to financial support, certain bursary programs may arrange team-building activities, study groups, mentorship initiatives, and vacation work opportunities.
However, a student loan is a financial tool that provides funds for education with the understanding that the borrower will repay the student loan, usually with interest and after completion of the studies. A student loan is seen as a financial tool that is either offered by learning institutions, major banks, student loan bodies, and government entities to assist with the costs of pursuing higher education (BudgetGist, 2022).
The information above outlines the differences between bursaries and student loans, focusing on repayment requirements, eligibility criteria, and the manner in which funds are disbursed. Below is a brief overview of each:
Bursary
- Repayment – the purpose of a bursary is intended to support a student’s education and for this purpose bursaries unlike student loans do not require a repayment.
- Eligibility criteria – the contributing factors for the eligibility criteria for a bursary is academic achievement, financial requirements, chosen field of study, or specific criteria outlined by the awarding institution or organisation.
- Funding sources – bursaries are provided by government agencies, educational institutions, private organisations, employer, or individuals with the intention of investing in the education of promising students.
- Application process – this process commonly includes submitting academic records, financial details, and occasionally essays or recommendations (Naidoo and McKay, 2018).
Student loan
- Repayment – in contrast to bursaries, student loans require repayment. The specifics of repayment terms and conditions may vary, but typically, the repayment period commences once the student completes their education and starts working.
- Eligibility criteria – students are required to enroll in an accredited educational program, guaranteeing that the institution meets set standards for recognised and valuable education. Meeting specific academic benchmarks, such as maintaining a minimum Grade Point Average (GPA) or completing designated course requirements, is often necessary to qualify for financial assistance and obtaining support to cover educational expenses.
- Funding sources – student loans can come from government institutions, private banks, or other financial entities. Loans backed by the government typically have more favourable terms and lower interest rates.
- Application process – this process includes submitting details about enrollment status, financial need, and sometimes undergoing a credit check. Usually, student loans allow for a grace period of twelve (12) months or until graduation before you need to start repaying the borrowed amount. It’s crucial to note that, like other loans, the borrower is responsible for covering any accumulated interest and any other associated fees (Bronkhorst, 2017).
In summary, the distinction between bursaries and student loans lies in their repayment terms. Bursaries provide financial support without the burden of repayment or the expectation of returning the funds. On the other hand, student loans are a form of financial aid that comes with a future repayment obligation, potentially leading to debt for the student after graduation. The financial impact of these two forms of financial assistance also differs significantly. Since student loans are repayable, it can result in a financial burden for individuals as they enter the workforce and the accumulated debt can have a lasting impact on their financial situation. In contrast, bursaries, being non-repayable, eliminate the long-term financial implications associated with debt (Wildschut et al., 2020).
Moreover, the availability and application processes for bursaries and student loans vary where the eligibility criteria for bursaries are set by the awarding organisation whereas the application procedures and eligibility requirements for student loans differ. Understanding these distinctions is crucial for individuals navigating financial aid options for their education. For those contemplating higher education, it is crucial to thoughtfully assess financial options, explore available bursaries and student loans, and make decisions tailored to their individual circumstances and goals (Wyness, 2016).
References
Bronkhorst, S. (2017, August). Student funding model used by the National Student Funding Aid Scheme (NSFAS) at universities in South Africa. Journal of Internet Banking and Commerce, 22(2), 1-20. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwibs5vCyoKEAxVNXUEAHQo1ArwQFnoECBIQAQ&url=https%3A%2F%2Fcore.ac.uk%2Fdownload%2Fpdf%2F95456510.pdf&usg=AOvVaw2C_3nZGeUxwVl5nNIX9oj_&opi=89978449
BudgetGist. (2022, March 06). How does a bursary differ from a student loan? Retrieved from BudgetGist: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR3OCfg4CEAxVVWkEAHaNpC0MQFnoECCMQAQ&url=https%3A%2F%2Fbudgetgist.com%2Fsouth-africa%2Floans%2Fhow-does-a-bursary-differ-from-a-student-loan%25EF%25BF%25BC%2F&usg=AOv
Naidoo, A., & McKay, T. J. M. (2018, October). Student funding and student access: A case study of a South African university. South African Journal of Higher Education, 32(5), 158-172. doi:10.20853/32-5-2565
Wildschut, A., Megbrown, E., & Miselo, A. (2020). Impact of funding on academic performance: An exploration of two South African universities. Journal of Education, 81, 29-49. doi:http://dx.doi.org/10.17159/2520-9868/i81a02
Wyness, G. (2016). Deserving poor: Are higher education bursaries going to the right students? Education Sciences, 6(5), 2-13. doi:doi:10.3390/educsci6010005
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