Do You Have to Pay Back FAFSA Money?

By Will Geiger

Will Geiger is the co-founder of Scholarships360 and has a decade of experience in college admissions and financial aid. He is a former Senior Assistant Director of Admissions at Kenyon College where he personally reviewed 10,000 admissions applications and essays. Will also managed the Kenyon College merit scholarship program and served on the financial aid appeals committee. He has also worked as an Associate Director of College Counseling at a high school in New Haven, Connecticut. Will earned his master’s in education from the University of Pennsylvania and received his undergraduate degree in history from Wake Forest University. Full Bio

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Annie has spent the past 18+ years educating students about college admissions opportunities and coaching them through building a financial aid package. She has worked in college access and college admissions for the Tennessee Higher Education Commission/Tennessee Student Assistance Corporation, Middle Tennessee State University, and Austin Peay State University. Full Bio

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Annie Trout

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Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania. Full Bio

Maria Geiger

Updated: September 13th, 2023

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? What forms do I need to fill out? Do you have to pay back FAFSA money? The short answer to that last question is, it depends. Keep on reading to learn about the types of financial aid that you do and don’t need to pay back!

Also see: Scholarships360’s free scholarship search tool

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 or Federal SEOG Grants. 

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. 

As a reminder, there are some scholarships that require the FAFSA to be completed to receive them, so always fill out that FAFSA even if you think you won’t qualify for federal funds! 

Learn more: How does withdrawing from a class affect financial aid?

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:

1. Stafford Direct student loans (both subsidized and unsubsidized)
2. PLUS loans or Parent Loans
3. Federal Perkins Loans

With the exception of the Perkins Loans which were phased out in 2017, these are all types of student loans that you might see in your financial aid award letter.

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.

Also see: All about public service loan forgiveness

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 and ultimately you can decide to take advantage of specific financial aid options (or not).

Obviously, you will want to accept all of the free 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. When evaluating this, you should be looking at the student loan interest rate, as well as the specific terms of the student loans.

Remember, winning outside scholarships and merit scholarships will allow you to take out less money in student loans, which is always a good thing!

Read more: How much student loan debt is too much?

Key Takeaways

• Complete the FAFSA by the appropriate FAFSA Deadline to ensure that you are considered for need-based and/or government financial aid
• Some colleges may also require the CSS Profile to qualify for financial aid, so you will want to make sure that you complete the CSS Profile by the school-specific deadline
• Carefully review your financial aid award letter so that you have a thorough understanding of what your financial aid package includes, as well as the net cost of the degree (taking into account the total cost of attendance)

Frequently asked questions about paying back financial aid