Overview
What it is
College financial aid comes in four main types: grants, scholarships, work-study, and loans. The big distinction is simple — grants and scholarships are gift aid you don't repay, work-study is money you earn, and loans are borrowed money you must repay with interest. Smart strategy: pursue free money first, borrow last.
How It Works
How it works
- GrantsMostly need-based gift aid — federal (Pell, FSEOG), state, and college grants. You don't repay them.
- ScholarshipsGift aid based on merit, talent, background, or other criteria — from colleges, states, employers, nonprofits, and communities. You don't repay them.
- Work-StudyA part-time job (often on campus) funded partly by the government; you earn a paycheck to help with costs.
- LoansBorrowed money you repay with interest — federal loans first (better terms and protections), private loans only if needed.
Who Qualifies
Who qualifies
Most aid starts with the FAFSA, which determines need-based eligibility (grants, work-study, subsidized loans). Scholarships have their own criteria (grades, essays, activities, background). Some aid is need-based, some merit-based, and some both — so a strong FAFSA and a strong application both matter.
How to Apply
Applying, step by step
- File the FAFSAUnlocks grants, work-study, and federal loans — and often college/state aid
- Complete the CSS Profile if requiredSome colleges use it for their own aid
- Apply for scholarshipsSearch widely — college, local, state, and national
- Compare award lettersWeigh gift aid vs loans across your offers
- Accept aid in the right orderGrants/scholarships → work-study → federal loans → private loans (only if needed)
Key Terms
Terms to know
- Gift aidGrants and scholarships you don't repay
- Self-help aidWork-study and loans — money you earn or borrow
- Need-based aidBased on your financial situation (via the FAFSA/SAI)
- Merit aidBased on achievement or talent, regardless of need
- Cost of AttendanceThe full yearly price aid is measured against
Tips
Tips to maximize it
- Chase gift aid hardestEvery grant/scholarship dollar is a dollar you never repay
- Borrow federal before privateBetter rates, fixed terms, and protections
- Don't over-borrowAim to keep total debt manageable relative to expected income
- Stack sourcesCollege + state + outside scholarships can combine
- Re-apply yearlyAid is awarded each year
Avoid
Common mistakes to avoid
- Treating loans like free moneyThey must be repaid with interest
- Skipping the FAFSAIt gates most aid, including some non-need aid
- Ignoring small local scholarshipsThey add up and have less competition
- Comparing offers by sticker price onlyCompare net cost after gift aid
FAQ
Frequently asked questions
- What's the difference between a grant and a scholarship?Both are gift aid you don't repay; grants are usually need-based, scholarships usually merit/criteria-based.
- Do I repay work-study?No — you earn it through a job.
- Federal or private loans?Federal first — better terms and protections.
- Which aid should I accept first?Free money (grants/scholarships), then work-study, then loans.
- Do I need the FAFSA for scholarships?Often yes — many colleges use it to award their own scholarships.
At a Glance
Key facts
- Gift aidGrants & scholarships (don't repay)
- Self-help aidWork-study (earn) & loans (repay)
- GatewayThe FAFSA (+ CSS Profile at some schools)
- Golden ruleFree money first, federal loans next, private loans last
Official Sources
Where to learn more
Learn more from the official source: