A common question we hear when discussing financial aid is, “Financial Aid, Do You Payback”? You cannot thoroughly understand your award without knowing the answer to this question. The answer is it depends on what type of aid you received and where it came from. The important point is that all financial aid is not created equal.
Sources Of Aid
To understand if you have to pay back your aid, first look at the sources of where it comes from. College financial aid comes from 3 sources;
- Federal Government
- State Government
- College or University
By looking for certain terminology or “trigger” words you can easily decipher if certain aid has to be repaid. Whenever you see the word “Grant” that means it is free money and is considered a grant or gift. This means that award does NOT have to be repaid. The same also can be said for when you see the word “scholarship”. This is money that does NOT have to be repaid. If instead of “Grant” you see the word “Loan” that means that specific amount does need to be repaid.
Most likely that repayment will be at some future date. That date is usually six months after graduation which means repayment of the loan will begin at that time. It should be pointed out that we are specifically referring to financial aid awards and loans that are within the award. We are NOT referring to loans that a family would secure that are not part of their child’s award. Those are loans that you would secure in addition to the money in the financial aid award. These are the type of loans you would secure to pay your Expected Family Contribution (EFC).
The below video further explains which parts of financial aid awards you need to payback and which parts of your award you do not. Specifically discussing popular grants from the Federal and State governments. As well as loans and work study programs.