FAFSA, Grants, and Loans Explained

The Free Application for Federal Student Aid determines eligibility for federal grants, work-study and federal loans, and is also used by most states and institutions to award their own aid. It is free, it opens in the fall for the following academic year, and it must be filed every year you attend.

File early. Several state and institutional programs award from the same pool until it is empty, so an identical application submitted in March can be worth less than one submitted in October.

Grants are need-based and do not require repayment. The federal Pell Grant is the largest, with state and institutional grants layered on top. Scholarships are typically merit- or criteria-based and come from the school, private organizations and employers.

Both can carry conditions: enrollment intensity, minimum GPA, or a specific major. Read the renewal terms the day you accept, not the semester you fall short.

Federal subsidized loans come first — the government pays interest while you are enrolled. Federal unsubsidized loans come second; interest accrues from disbursement. Private loans come last, with credit-based rates and far fewer protections.

A useful ceiling: keep total borrowing below the salary you realistically expect in your first year of work. Borrow per semester rather than accepting the full annual offer by default.

Award letters mix grants, loans and work-study in one column and rarely label them clearly. Separate the money you keep from the money you repay, subtract the total from cost of attendance, and the remainder is what you actually owe.