Financial aid comes in three broad types, and the order in which you use them matters. Free money first, then earned money, then borrowed money.
Scholarships
Scholarships are typically awarded for merit, background, field of study, or other criteria, and generally do not need to be repaid. They come from schools, employers, nonprofits, and community groups.
Grants
Grants are usually need-based and also generally do not need to be repaid. The federal Pell Grant is the best-known example. Many states and colleges offer their own grants.
Loans
Loans must be repaid with interest. Federal student loans offer borrower protections that most private loans do not, such as income-driven repayment options. Borrow only what you need.
Which to Use First
| Priority | Type |
|---|---|
| 1 | Scholarships and grants (free) |
| 2 | Work-Study and savings (earned) |
| 3 | Federal loans, then private loans (borrowed) |
Learn the repayment impact of any loan in our Student Loan Repayment Calculator guide.