Federal student aid can come as a grant, scholarship, or loan. Although each can fund your school experience, they do so in very different ways and have distinct requirements. The main difference is whether you need to repay the funds.
You do not need to pay back education grants and scholarships in most cases. However, you may be liable for the funds if you fraudulently obtain them or do not adhere to the requirements. Since you typically do not have to return funds from a grant or scholarship, they are the best financial aid you can receive.
While you do not need to pay back grants and scholarships, how you qualify for each is a clear distinction. The issuer of grants gives them on the basis of need, whereas scholarships are based on merit.
Your field of study may qualify you for grants or scholarships. For example, teaching is an in-demand field, and the government and other organizations make it easier for you to pay for a teaching degree.
Some popular grants include:
- Pell Grants.
- Teacher Education Assistance for College and Higher Education Grants (TEACH).
- Federal Supplemental Educational Opportunity Grants (FSEOG).
- Iraq and Afghanistan Service Grants.
While there are grants for graduate students, most federal grants are for undergraduate studies. Applying for student grants online is one of the easiest ways to obtain free money. Many grant applications are simpler than scholarships since they are based on finances.
Merit-based scholarships can include achievements in academics and extracurricular activities. You can get a scholarship for being part of a certain ethnicity or group, such as the LGBT community. Organizations will also give you a scholarship if you win a competition.
Unfortunately, grants and scholarships do not often cover all of your educational expenses. You will likely need a loan to pay what free financial aid does not cover, and a loan requires repayment.
You can get a loan through the government or a private lender, but federal loans often have better terms. Federal loans have lower interest rates and benefits, like flexible payment plans, and are subject to certain regulations that protect the borrower.
Subsidized federal loans are the best option since the interest does not accrue until after you graduate or leave school. Unsubsidized loans begin accumulating interest when you receive the funds, which means your debt will be higher than the original loan amount by the time you graduate.
You can apply for federal loans and grants through one application. Find out how to fill out the Free Application for Federal Student Aid form next.
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