Do you qualify for loan forgiveness or lower monthly payments?
CALL US TO FIND OUT! 800-820-8128

Do You Have to Pay Back FAFSA or Financial Aid?

pay back fafsa

Are you looking for financial aid to finance your education? Sure, external sources of money are sweet. If the money is not leaving your pocket, you might feel blessed. FAFSA – Free Application for Federal Student Aid is what makes these fund sources accessible to students. Yet, all good things might end one day. When it comes to repayment, you might find yourself in deep trouble unless you already have funds to repay the aid. It is also true that not all federal aid types need to be repaid. Some of them are grants as gifts, and if you keep your promises, you will not need to worry about how to pay back FAFSA. However, before you take any responsibility, make sure you understand the terms of financial aid. 

Do You Have to Pay Back FAFSA?

As mentioned, FAFSA is not a financial aid program. Instead, it is the application to different programs. So, the right question will be whether you need to pay back financial aid. 

Do You Have to Pay Back Financial Aid?

Short answer: There exist three types of financial aid, and the repayment depends on the type of aid you get. 

  1. Grants/Scholarships- Grants are like gifts distributed due to financial need or merit (such as educational achievements). Those student education assistance funds do not need to be repaid as long as the awardee meets the eligibility conditions.
  2. Federal Work-Study Program- As its name suggests, this type of aid is made in return for a service, such as part-time work in school. Hence, it is like employment, and students earn funds hourly or monthly. You do not need to repay such aid with money, but you provide service in exchange.
  3. Student Loans- this type of financial aid is student debt, and it is granted due to need or non-need. Debt has to be repaid. You need to repay the original debt amount and its interest in addition. Besides, you can apply for student loan forgiveness or discharge programs to avoid repayment.

If you wondered whether you need to pay back FAFSA, now you know the short answer. Your repayment will depend on what type of financial aid you are getting. However, there still exist many details. Hence, make sure you get detailed information in the next section about the program you are interested in.


pay back fafsa

Grants are one type of federal aid that aims to help students to finance their education. The government provides federal grants, but you can also find grant opportunities from private companies, non-profit organizations, schools, etc. Grant is a free source of money which means you do not need to worry about paying back FAFSA- the scholarship. Some of the programs you can apply are the following:

  • Pell Grant
  • TEACH- Teacher Education Assistance for College and Higher Education 
  • FSEOG- Federal Supplemental Educational Opportunity Grants
  • Iraq and Afghanistan Service Grants, etc.

Usually, grants are provided due to the financial need or challenges of the student. The student needs to fill out the FAFSA to apply for such opportunities. 

Keep in mind that you need to maintain qualifications during the grant award period. If you lose eligibility, you might be asked to repay the scholarship fully or partially. For example, if you withdrew from your program, changed enrollment status, or received grants from other sources, you can be required to pay back FAFSA – the scholarship amount.

In such cases, the school will inform the student about repayment. The awardee will not have a long time to repay the grant in small amounts, like in the case of student loans. Instead, they will be asked to repay a portion or total amount of the grant in 45 days. 

Federal Work-Study Programs

Some students can enroll in federal work-study programs to earn additional money to finance education. These programs are like employment opportunities. Students, graduate, professional or undergraduate, can work part-time to make money. 

They can work on campus- for school- or off-campus. Some schools have work-study partnerships with private companies. In this way, they can also give students access to part-time work opportunities in their study field.

In return for the service, students earn hourly or monthly wages. The exact rate depends on the work type, but the minimum wage level is following federal standards. Depending on the financial situation, funding possibilities, and time of application, the students can earn more. 

Students cannot work as much as they want. In general, they cannot exceed the total award amount. 

Due to its nature, this program is like an employment opportunity. Hence, you do not need to pay back financial aid of this type.

Student Loans

Do you have to pay back financial aid? Perhaps one of the most crucial answers to this question is “Yes if you get loans.” Student debt is such an important issue that you need to be highly aware of its repayment process before you even think about getting one. 

Every year thousands of students struggle with debt repayments and default on their loans. Make sure you know the heavy burden of repayment for your student loans.

Student loans are a source of finance that requires repayment both for the original loan amount and additional interest. The interest rate and repayment process might depend on the student loan type:

Direct Subsidized Loans- it is distributed to undergraduate students depending on their financial challenges. Hence, its interest rate is low.

Direct Unsubsidized Loans- this non-need-based student loan program is available to undergraduate, graduate, and professional students with higher interest rates.

Direct PLUS Loans- this loan has two subcategories. When made to graduate or professional students, it is called a Graduate or Grad PLUS loan. When made to parents, it is called a Parent PLUS loan. Only the parents of undergraduate students can apply for this financial aid. 

Repayment Options for Student Loans

Repayment Options for Student Loans

Whether you get a federal or private student loan, you need to repay the original balance and its interest to the lender. Depending on the type of your student loan, the repayment conditions can change.

Private lenders usually require borrowers to start repayment immediately as they get the loan. Some allow me to repay the debt after graduation. Others give students decreased repayments during the in-school period. For example, private student loan borrowers can be asked to pay only the interest during this period. There might also exist fixed repayment amounts, as low as $20 per month when the borrowers still study.

Yet, the repayment conditions of private lenders are more complex than what federal loans demand. Federal loans usually have lower interest rates. It is possible to defer the payments till graduation and even six months after graduation. The borrowers can choose among many repayment plans. Some borrowers can also apply for student debt forgiveness programs, like Public Service Loan Forgiveness, to eliminate their debt entirely. 

Final Words

Federal aid programs are excellent to help students to finance their education. However, when it is time to pay back FAFSA or federal aid, individuals can face hard times. It is also true that not all federal aid types are repaid. For example, student scholarships, grants, and work-study programs do not demand students to repay the aid. Yet, you have to pay the student loans on time and in the total amount.