Not all FAFSA money is a loan — grants don't require repayment, but loans do
The answer depends on what type of aid you received. FAFSA opens the door to several kinds of money: grants, which you keep; loans, which you repay with interest; and work-study, which you earn through employment. Your aid package likely includes a mix of these. The grant portion is yours to keep. Any loan portion — whether federal or private — must be repaid starting after you graduate or drop below half-time enrollment.
Your school's financial aid office sends you an award letter that breaks down exactly what you received. It will list grants separately from loans. If you're unsure which is which on your letter, call the aid office and ask them to walk you through it line by line. This matters because the repayment rules, interest rates, and forgiveness options are completely different between grants and loans.
Key Takeaways
- Federal Pell Grants and other grant awards never require repayment, regardless of your income or whether you finish school.
- Federal student loans (Stafford loans, PLUS loans) must be repaid with interest, and repayment typically begins six months after graduation or when you drop below half-time enrollment.
- Your school's award letter separates grants from loans; if you can't tell which is which, contact the financial aid office to clarify.
- Loan repayment terms vary by loan type — federal loans offer income-driven repayment plans, while private loans typically do not.
Grants are assistance programs you don't repay
Grants are need-based awards that don't require repayment. The most common is the Federal Pell Grant, which goes to undergraduate students from lower-income households. Your school may also award institutional grants (money from the school itself) or state grants. None of these require you to pay anything back, even if you leave school, change majors, or don't graduate.
The catch is that grants are typically smaller than loans. A Pell Grant for the 2024–2025 school year maxes out at a set amount (this changes yearly), and many students receive less. That's why most aid packages combine grants with loans to cover the full cost of attendance. The grant portion is genuinely free; the loan portion is not.
Federal student loans must be repaid with interest
If your FAFSA package includes federal student loans, you will repay them. The most common types are Direct Subsidized Loans and Direct Unsubsidized Loans. Subsidized loans don't accrue interest while you're in school at least half-time; unsubsidized loans do. Both require repayment after you graduate or drop below half-time status.
Repayment typically begins six months after graduation (this period is called the grace period). You'll owe the full amount you borrowed plus interest. Federal loans offer several repayment plans, including income-driven options that cap your monthly payment based on what you earn. If you're struggling to repay, you may also be able to pause payments through deferment or forbearance, though interest may still accrue.
Parent PLUS loans (borrowed by your parents on your behalf) also require repayment, and they begin accruing interest immediately — even while you're in school. Your parents are responsible for these, not you, unless they explicitly transfer the debt to you after graduation.
Work-study earnings are yours to keep
If your aid package includes work-study, that's a job opportunity, not a loan or grant. You earn money by working on or near campus, typically 10 to 20 hours per week. The wages are yours — you don't repay them. However, you only receive money for the hours you actually work. If you don't work, you don't earn anything, and the work-study award doesn't cover the cost of attendance on its own.
Work-study jobs are often flexible around your class schedule, which is why they're common in financial aid packages. The hourly wage is at least minimum wage, sometimes higher. The money you earn goes directly to you, and you can use it however you need — there's no restriction on how you spend work-study wages.
How to find out what you owe and what you don't
Your school sends an award letter after you submit your FAFSA. This letter lists every type of aid you've been offered. Look for line items labeled "grant," "scholarship," or "gift aid" — these don't require repayment. Look for "loan" or "Stafford" — these do. If the letter uses unclear language, contact your school's financial aid office and ask them to identify which awards are grants and which are loans.
You can also log into your federal student aid account at studentaid.gov. This portal shows all federal loans you've taken out, their balances, interest rates, and repayment status. It does not show grants, because grants have no repayment obligation. If you took out private loans through a bank or lender, those won't appear here — you'll need to contact the lender directly.
What happens if you don't repay a loan
If you don't repay a federal student loan, it goes into default after you miss payments for 270 days (about nine months). Once in default, the entire remaining balance becomes due immediately, your credit score drops significantly, and the government can garnish your wages or tax refunds. The loan servicer may also add collection fees on top of what you already owe.
If you're struggling to make payments, contact your loan servicer before you fall behind. Federal loans offer income-driven repayment plans that can lower your monthly payment to as little as $0 if your income is low enough. You can also request a deferment or forbearance to temporarily pause payments. These options prevent default and protect your credit.
Frequently Asked Questions
Do I have to repay a Pell Grant if I don't finish college?
No. Pell Grants and other federal grants never require repayment, regardless of whether you graduate, leave school, or change programs. Once the money is disbursed to you, it's yours to keep. However, if you withdraw from school partway through a term, your school may recalculate how much grant money you were may have access to to and ask you to return a portion.
What if I received a scholarship — do I have to pay that back?
Scholarships are typically gift aid and don't require repayment. However, some scholarships come with conditions — for example, you may need to maintain a certain GPA or work in a specific field after graduation. Read your scholarship agreement carefully. If it says "repayment required" or "service obligation," contact the scholarship provider to understand what you owe.
Can I defer my federal student loans if I can't afford to pay right now?
Yes. Federal loans offer deferment and forbearance options that pause your payments temporarily. You may also be able to switch to an income-driven repayment plan that lowers your monthly payment based on your current income. Contact your loan servicer to explore these options before you miss a payment.
Do private student loans have the same repayment rules as federal loans?
No. Private loans are issued by banks and lenders, not the federal government, and they have stricter terms. Most private loans don't offer income-driven repayment plans, deferment, or forbearance. They typically require repayment to begin while you're still in school. Check your promissory note to understand your specific loan's terms.
If my parents took out a Parent PLUS loan for me, am I responsible for repaying it?
Your parents are legally responsible for repaying Parent PLUS loans. However, you can agree to pay it back voluntarily. If your parents pass away or become permanently disabled, the loan may be discharged. If you're concerned about the debt, discuss repayment expectations with your parents before graduation.