Federal student aid comes in many different forms, and not all of these forms need be repaid. You may be able to receive education grants, scholarships, and loans. While each of these types of student aid can help cover the costs of your education, it’s essential that you know the difference between each type of fund. The primary difference between them is whether or not they need to be repaid.
In most cases, you will not be required to repay education grants and scholarships. However, each grant and scholarship may include requirements that must be met to avoid having to repay funds. Because education grants and scholarships do not usually need to be repaid, they are the best type of aid you can receive, and the first type of aid you should apply for.
The difference between education grants and scholarships is that grants are generally available based upon financial need while scholarships are based on merit. Additionally, your field of study can qualify you for specific scholarships and education grants. For example, in-demand positions, such as teachers, have additional grant and scholarship opportunities, making it easier to fund education for becoming a teacher.
The most popular education grants include:
- Pell Grants
- Federal Supplemental Educational Opportunity Grants (FSEOG)
- Teacher Education Assistance for College and Higher Education Grants (TEACH)
- Iraq and Afghanistan Service Grants
While some grants for graduate students are available, most federal grants are restricted to undergraduate students. Applying for student grants online is the easiest way to obtain a grant, but there are other ways you can apply. The applications for grant programs are simpler than that of scholarships since education grants are based on your finances.
Merit-based scholarships can have many different types of criteria, including academic achievements and extracurricular activities. You can also qualify for scholarships for being part of a specific ethnicity or group. For example, you may have additional scholarship opportunities if you are part of the LGBT community or you are a single parent.
Unfortunately, education grants and scholarships are not always enough to pay for higher education. Once you exhaust all of your free financial aid opportunities, you can consider getting a student loan to cover your remaining expenses. Unlike grants and scholarships, loans will need to be repaid. Student loans can be acquired through the federal government or through a private lender. However, federal loans generally have better terms, including lower interest rates. Additionally, federal loans have more flexible repayment plans and there are certain regulations that protect borrowers.
Typically, subsidized federal loans are the best option. These loans do not accrue interest while you are attending school. Instead, interest begins to accumulate after you leave school or graduate. Unsubsidized loans begin to accumulate interest after you receive the loan, which means your repayment amount will be higher than the original loan by the time you finish your education.
You can apply for education grants, scholarships, and federal loans in the same application. Click the next slide to learn how to fill out the Free Application for Federal Student Aid (FASFA) form.