Financial aid does help each student significantly in affording college and the subsequent education with extreme ease by taking away a good part of the financial burden. However, as they say ‘there’s no such thing as a free lunch.’ So, a part of financial aid also comes with its terms and conditions.
Financial aid received usually takes three forms (apart from the awarded scholarships) of grants, work-study, and loans. The part of financial aid received as loans are supposed to be paid back. Grants and scholarships are rewarded to you and hence need no such thing while work-study is the amount you receive under financial aid for the actual work that you have done and also doesn’t need to be paid back.
There are various types of loans available, and each of the different type has different terms. The loan applied could have been under student loan or parent loan. Although both the types of loans have to be returned with interest, there is an advantage of receiving student loan over parent loan. Parent loans require starting the repayment a few months after final distribution of loan funds and the interest is counted in the period when the student is still in college. Unlike parent loans, the government makes sure to offer the best possible terms in case of a student loan and starts charging interest only after the student is out of college. However, the repayment of the payments which are due could start immediately after college.
After submitting FAFSA and receiving your SAR which will also be sent to all the schools you’re selected for, a financial package would be made from your financial needs and the school’s capability, and it is called your award letter. An award letter will contain all the funds you are allocated and the loans that you would be eligible for. The best part in this is that you can choose to accept or reject a particular fund or apply for a particular loan. Hence, you can decide according to your analysis and convenience.