What's the difference between a grant and a loan?

Concerns & risks

You were trying to understand your financial aid package, but you're not sure which money you have to pay back.

Loans must be repaid.

Causes & evidence

Grants generally don't need to be repaid; loans do. See FAFSA basics and student loan repayment.

What to do

1. Accept grants first.
2. Then work-study.
3. Borrow loans only as needed.

Common mistakes: Common mistakes: treating all aid as free money. Grants and scholarships generally don't need to be repaid, but loans do, with interest. Read the award letter carefully; some letters list loans in the same section. Use free money first. Ask the financial aid office if anything isn't clear. Some grants can turn into loans if you don't meet requirements, so read the conditions. Pay close attention to loan types and interest rates. Ask whether any scholarships come from outside organizations and how they affect your other aid. Before accepting, make a simple list of each aid type, how much, and whether it must be repaid. Remember you can turn down or reduce loans.

Speed Man tip: Read every line of your aid offer.

Wrap-up: Grants free. Loans repaid. Borrow less.