Do you have to pay back FAFSA money?
Financial aid can be a complex process for students and parents. Typically, many questions come up, such as:
Will I get enough money to pay for college?
Do I need to fill out the Free Application for Federal Student Aid (or FAFSA)?
Do you have to pay back FAFSA?
This last question–Do you have to pay back FAFSA?–is especially important to many students who are concerned about student loan debt. Keep on reading to learn more about what money you do and don’t need to pay back.
Financial aid that doesn’t need to be paid back
The good news for many students is that much of the money you are awarded through the FAFSA does not need to be paid back. This includes need-based financial aid grants that are awarded by individual colleges, as well as federal and state grants like the Pell Grant.
All of this grant money is free money for you to use on your education. Usually, the only stipulation is that you may need to maintain a specific number of credit hours and GPA to remain eligible for your need-based grants.
Financial aid that needs to be paid back
All federal student loans fall into the category of financial aid that needs to be repaid. Federal student loans fit into the following categories:
- Stafford loans
- Direct student loans
- PLUS loans or Parent Loans
- Federal Perkins Loans (note, these were phased out in 2017)
Student loan repayment can vary according to your loan terms and repayment plan. You can learn more about the various repayment options to decide which repayment option will make the most sense for you and your situation.
It is also worth mentioning that some students may be eligible for student loan forgiveness. Loan forgiveness, or “cancellation,” may be granted in certain situations including if you are disabled and are unable to work or if you teach or go into public service and make 120 payments.
Remember, you don’t have to take out all financial aid offered to you
One of the big misconceptions is that students need to take out all of the financial aid that is offered to them. This is not true.
Obviously, you will want to accept all of the grant money awarded to you. However, it may not always make sense to take out all of the student loans offered to you. You should always do the math and calculate the amount of money in student loans that you absolutely need to take out. Remember, winning outside scholarships and merit scholarships will allow you to take out less money in student loans, which is always a good thing!