Financial Aid Guides

Scholarships vs. Bursaries vs. Grants vs. Loans: What's the Difference?

These terms get used interchangeably, but they mean very different things in the Canadian system. Here's a clear breakdown:

Key takeaway: Always pursue free money first (scholarships, bursaries, grants), then government loans (which have lower interest rates and better repayment terms than private loans), and only consider private loans as a last resort.

How Student Loans and Scholarships Work Together

One of the most common questions Canadian students ask is: "If I win a scholarship, will my student loan be reduced?" The answer is nuanced, and it's important to understand before you apply.

The general rule

Government student aid (OSAP, StudentAid BC, Alberta Student Aid, etc.) calculates your "assessed need" — the difference between your educational costs and your expected resources. Scholarships and bursaries are considered resources. If your total resources exceed your assessed need, your government aid may be reduced.

But here's what actually happens

• Small scholarships ($1,000-$3,000): Usually don't affect your government aid significantly, because most students have assessed need that exceeds their total resources even with the scholarship
• Medium scholarships ($3,000-$10,000): May reduce the loan portion of your aid (which is good — less to repay) while the grant portion often stays the same
• Large scholarships ($10,000+): More likely to reduce your total government aid package, but you're still better off — free money always beats borrowed money

The "reportable income" rule that trips people up

OSAP and most provincial programs require you to report scholarships and bursaries above a certain threshold. For OSAP, scholarships over $1,800 per study period (as of recent guidelines) may be counted as income and could reduce your loan. However, the grant portion (free money from the government) is typically the last to be reduced. In practice, winning a scholarship usually reduces the money you have to borrow — which is still a net win.

Can Scholarships Reduce Your Student Aid?

This is the specific concern that holds many students back from applying. Let's address it directly with how each major provincial program handles scholarship income:

The practical advice: Apply for everything you're eligible for. Report all income honestly on your student aid application. If your scholarship reduces your loan, celebrate — you just traded debt for free money.

Best Funding Options for Canadian Students

The optimal funding strategy combines multiple sources. Here's the recommended order of pursuit:

1. Government grants (free money, needs-based): Apply for provincial student aid (OSAP, StudentAid BC, etc.) to get assessed for the Canada Student Grant ($3,750/semester for full-time students from families earning under ~$60K) and provincial grants. This is automatic when you apply for student aid.
2. University entrance awards (free money, merit-based): Many are automatic (no separate application). Check your university's scholarship grid based on admission average. Apply for competitive awards through your university's portal.
3. External scholarships (free money, merit/need): Use our quiz to find matches. Focus on scholarships where you meet specific eligibility criteria (province, field of study, background).
4. University bursaries (free money, need-based): Apply through your university's financial aid office every year. These are separate from entrance awards and many students don't know about them.
5. Government student loans (borrow, favourable terms): Federal and provincial loans have income-driven repayment, interest relief, and debt forgiveness programs. Always choose government loans over private ones.
6. Work-study and co-op (earn while learning): On-campus jobs and co-op work terms can provide $5,000-$25,000+ per term.

Merit-Based vs. Need-Based Aid in Canada

Understanding the difference between merit-based and need-based aid helps you know which awards to target and how to present yourself in applications.

Many Canadian awards are hybrid — they consider both merit and need. Don't self-select out of any category. If you're unsure whether you qualify as "need-based," apply anyway and let the committee decide.