Do you have to repay financial assistance? – Councilor Forbes

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University in the United States is expensive – outstanding student debt is over $ 1.5 trillion nationwide, and the average borrower owes around $ 32,000. With numbers like this, it’s common to want to reduce the amount you have to pay for your degree.

The first step to lowering your education costs is to complete the Free Application for Federal Student Aid (FAFSA). This form, which must be submitted annually, is your gateway to the scholarships, grants, and loans you may need to fund your education. While some of this assistance is free money that does not need to be repaid, other forms of financial assistance must be repaid while you are still in school or soon after. graduation.

Find out what types of financial rewards don’t need to be paid back and which do, as well as ways to reduce what you owe.

What types of financial assistance do not need to be repaid?

Some types of financial assistance are considered free money or assistance that does not need to be repaid. If you can access these opportunities, it is wise to maximize these options before you look to other sources of funding.


Grants are generally offered by federal, state or local governments, colleges and universities, and private organizations. These scholarships are often based on financial need and you usually need to submit income documents to be eligible. Other grants may be awarded based on a variety of factors, including your ethnicity, field of study, or family military affiliation.

You may automatically become eligible for certain rewards, including the Federal Pell Grant, after you submit your FAFSA. If you are not automatically eligible for grants from the government or your school, you can search and apply for grants individually.

Some grants have certain rules and obligations that must be observed. Federal TEACH grants, for example, require recipients to teach full-time for four years in a high-need area; if you don’t, the grant will convert to a loan and you will have to repay it.


While grants are generally need-based, scholarships tend to be merit-based. But the scholarships aren’t just awarded to A-level students or star athletes. There are thousands of scholarships based on applicants’ interests, racial background, sexual orientation, career path, etc.

You may be automatically eligible for scholarships from your college or university, but you can also research and apply for scholarships as early as high school.

Work study

The federal work-study program is offered to students with financial needs. If you qualify, you must work in a qualifying part-time position where you can earn money to fund your education. These jobs are often available on campus and may even be related to your field of study.

Since you are working to earn money and finance your education, you are not borrowing money that must be repaid.

Financial assistance that must be repaid

Once you’ve exhausted all of your free options to pay for your education, you can turn to other funding opportunities. Student loans are financial aid options that must be repaid, with interest.

Federal student loans

Federal student loans are offered by the Department of Education for college-related expenses, including tuition, fees, books, and housing and board. You can also use loans to pay for transportation to and from campus, childcare while you are in class, and some housing costs, such as furniture.

Federal loans must be repaid according to the terms detailed in your loan agreement and repayment plan. You can borrow what you need to pay for your education and start paying back after you graduate or are no longer enrolled part-time.

Even if you have to repay the money, federal student loans offer flexible repayment plans. For example, if you can’t pay your payments, you can temporarily suspend them through deferral or forborne. You can also subscribe to an Income Based Repayment Plan (IDR), where your monthly payments are based on your income and the size of your household. After 20 or 25 years, depending on which IDR plan you are in, the remaining balance is canceled.

Student loan cancellation is only one option for federal student loans, but there are several cancellation programs available. In addition to IDR plans, teacher loan forgiveness and public service loan forgiveness (PSLF) are possible if you have federal loans and qualify. Forgiveness does not entirely eliminate your repayment obligations, but it does mean that you will not be required to repay the full amount.

Private student loans

While federal student loans come from the federal government, private student loans come from private companies like online lenders, banks, and credit unions. When you’ve exhausted your free money options and hit your limit on federal student loans, private student loans can help you bridge any funding gap.

Private student loans need to be repaid, but when you start repaying depends on your lender. Most lenders offer the same terms as federal student loans, giving you the option of graduating or going below half-time enrollment before you start making payments. But you will need to check with each lender to make sure.

Private student loans generally do not offer income-tested repayment or rebate plans like federal student loans do. Some lenders offer deferral options, but these are not available everywhere. But that doesn’t mean you can’t get help paying off your student debt; some programs will help you pay off your private student loans if you can meet certain obligations.

How to reduce what you owe

As you find ways to pay for your education, there are several ways you can reduce what you owe in financial aid.

  1. Complete the FAFSA early. When the FAFSA application window opens each year in October, fill it out as soon as possible. Certain types of assistance are offered on a first come, first served basis. Therefore, it may pay off to send your request quickly.
  2. Maximize your free money options. Besides federal, state, and institutional aid, you can find other sources of free money. Private companies and non-profit organizations offer scholarships and grants for a variety of reasons including your major, special needs, personal accomplishments, and socio-economic status. Organizations donate money for many different reasons, you just need to find the ones that match your skills and experience.
  3. Take Federal Loans After Free Money. Once you’ve exhausted all of your free money options, federal student loans are usually the next best choice. You don’t have to take all of the loan money that is offered to you, so only borrow what you need. This will help you graduate with lower debt.
  4. Apply for private student loans as a last resort. For most borrowers, private student loans are more expensive and less flexible than federal options. For this reason, consider private student loans if you still have funding gaps that are not covered by grants, scholarships, or federal assistance. If you don’t qualify for private loans on your own, adding a co-signer to your application can help you find better rates.
  5. Renew your FAFSA. To continue to receive federal financial assistance, you will need to renew your FAFSA each year. Do this every year you are enrolled in school to make sure you don’t miss out on any financial aid. And don’t forget that you can get scholarships and grants no matter what year you are in (even if you are pursuing graduate and professional studies), so keep searching and applying for financial aid throughout. of your academic career.

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