<p>Hi,</p>
<p>A lot of schools are telling me that financial aid is not free and i have to pay it back.I dont understand some of my friends didnt have to pay back.</p>
<p>a. When is financial aid free and when is it not?
b. I know loans you have to payback but when is financial aid free where you dont have to pay back?</p>
<p>Thank you.</p>
<p>Grants are free. Scholarships are free. Loans must be paid back. FA can include both loans and grants.</p>
<p>A grant- such as the Pell grant- you would not have to pay back.
[Federal</a> Pell Grant Program](<a href=“http://www2.ed.gov/programs/fpg/index.html]Federal”>Federal Pell Grant Program)
Loans you have to pay back-
subsidized loans - the interest does not accrue while you are in school,
unsubsidized, interest does accrue.</p>
<p>It really depends on what type of aid you are eligible for. If your family is low income, you may receive some grant aid. Grant aid does not have to be paid back. Many people are not eligible for federal grant aid as it requires very low income. If you receive merit scholarships, those do not have to be paid back. Most people have loans to one degree or another. Those have to be paid back.</p>
<p>There are also occasions when grants may have to be paid back. Generally when a student drops classes before a certain point in a semester where grants have been awarded.</p>
<p>I had a tiny Federal Perkins Loan from my college ($800). It did not accrue interest while in school or during grace period. Same with Subsidized Federal Stafford loans. Unsubsidized Stafford Loans do collect interest while in school and grace. </p>
<p>Just do your research, the rates are not always lower for Stafford loans. I have a few private loans, and two of the lenders have lower rates than my Staffords (though they did collect interest while in school - I made interest-only payments while in school). However, one lender of mine is significantly higher. </p>
<p>On the other hand - if you have financial hardship after graduating college (can’t find work, the work you find pays very little, you get sick, etc.), federal loans are easier to defer or put in forbearance to give you some breathing time to find better work or heal. Private loans practically tell you to default on your other loans so you can pay THEM 
These people mean business. So weigh the pros and cons with your parents or financial advisor.</p>