Grants, loans and work-study, told apart

An aid offer often lists grants, loans and work-study side by side as though they were the same thing. They are not, and the difference shows up years later.

Grants and scholarships

A grant is money you generally do not pay back. Federal Pell Grants, state grants and grants from the college itself are based mainly on financial need. Scholarships work the same way but are often tied to merit, a field of study or a community.

Some grants come with conditions, such as keeping a certain grade average or staying enrolled full time. If you drop below them, part of the money can become a balance you owe.

What to do

• Add up grants and scholarships separately from loans
• Ask whether each grant renews and what keeps it
• Treat work-study as wages you still have to earn
• Borrow federal before private

Loans

A loan is borrowed money that you repay with interest. Federal student loans are made by the Department of Education and come with fixed rates and repayment options set in law. Some are subsidized, which means interest does not build up while you are in school at least half time.

Private loans come from banks and other lenders. They can carry variable rates and fewer protections, so most counselors suggest using federal loans first.

The only aid that lowers what college costs you is the kind you never have to repay.

Work-study

Federal Work-Study is a part-time job, usually on campus, that the school helps arrange. You are paid as you work, through a regular paycheck, rather than receiving the amount up front.

The figure on your offer is the most you can earn through the program, not money credited to your bill.