Difference between Literature and literature

Very simply, Literature is the study of texts, and Linguistics, the technical study of language.

Linguistics includes, for example, understanding of etymology, and the physiology of Word formations in the mouth, studies which would be absent from Literary studies. Movements in Literary Theory, like Structuralism or Deconstruction ism have gone some way toward a correlation of the two disciplines, but at your general undergraduate level, the Text/Language distinction holds water.