Is All Financial Aid a Loan That Must Be Repaid?

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Is All Financial Aid a Loan That Must Be Repaid?

Most need-based aid is in the form of student or parent loans. However, these loans do offer considerable financial advantages over other forms of borrowing. They usually have lower interest rates, and the interest may be deferred while the student is in school. That’s free money; and repayment terms are usually more generous than those of other loans. Some loans may also be "forgiven" if the student performs certain community service jobs upon graduation, such as teaching in a deprived area. Check the college financial aid office to learn more about these favorable provisions.

Need-based aid may include grants and scholarships. These are free money that does not have to be repaid. However, the student may be required to maintain certain academic grade-point levels. Grants and scholarships are awarded on a first-come, first-served basis, so it pays to apply for these early.

Students with financial need may also be able to get guaranteed work on or near the campus through the "work-study" program. These jobs may not be available to students who do not qualify for need-based aid. Akin to this are the military ROTC and reserves programs. For those inclined to serve in the military upon graduation, there are substantial financial benefits to signing up and having the government subsidize their education.