Gift Aid Grants And The Differences From Loans

Last Updated on January 17, 2024 by Lori Pace

You may have questions about the options available to your situation, regardless of how many times you read it. You may not have been offered any scholarships or financial aid, but you were likely offered a federal loan. We understand that award letters can be confusing. It is natural to wonder what the differences are between student loans and gift aid grants. Or what must be paid back and what can you keep?

What Are Gift Aid Grants?

Gift aid is money given to students who are eligible and doesn’t need to be repaid. It’s free money. This is usually used to refer to scholarships and grants. Gift aid grants don’t have to be limited to the federal government. It can also be distributed by state governments, schools, colleges, nonprofits and private organizations.

The amount you get will depend on your location. This amount could cover all of your college expenses, or just a fraction. You may be eligible for housing, tuition waivers, or up to a specific amount per semester towards tuition.

How Does Gift Aid Grants Differ From Student Loans?

Whether you are in school or after graduation, loans will eventually have to be repaid (usually with additional interest). Gift aid is money that you don’t have the obligation to repay.

It is important to understand the type of funding that you will receive. After submitting the FAFSA, and receiving your acceptance letter from college, you will typically receive a financial assistance offer letter.

The letter you receive will tell you how much it will cost to attend school as well as any gifts and loans. It’s possible to accept only a portion of the loan offer.

Will I Always Receive Offers For Both Gift Aid Grants And Student Loans?

Not necessarily. Although most applicants are eligible for federal loans of some type, not all applicants will be eligible to receive gift aid. This is because scholarships and grants require applicants to meet certain qualifications.

Student Loans

You don’t have the obligation to accept all offers, even if you receive an award letter offering student loans and gift aid. If you don’t wish to borrow money, you can accept gift aid and decline federal loan offers. If you have any questions, the financial aid office at your school will be able to help you accept an offer.

When Do I Need To Start Paying Back Student Loans?

It all depends on the terms of your loan. You don’t have to repay federal student loans for six months after graduating. This is six months after a student falls below a half time schedule. The grace period, which is six months, is generally six months.

Many private lenders offer similar grace periods. Some, such as College Ave Student Loans offer options about making payments while you are in school. This can reduce the price of your student loan.

It doesn’t matter what, it is always a good idea that you pay as much as possible as soon as possible to start paying off student loan debt.

Will The Amount Of Gift Aid I Receive Always Be The Same Every Semester?

Not necessarily. It all depends on which school you are receiving gift aid grants. Ask your school’s financial aid department if you will receive gift aid in a different amount each year.

There are a few things that could affect how much you get:

  1. A change in enrollment status
  2. You have not met certain conditions for your grant
  3. Students have less need of student aid

The annual federal loan limits for Direct Subsidized Loans and Unsubsidized Loans vary from year to year. A typical undergraduate freshman can borrow up to $5,500 to pay for their first year of school if they are still considered dependent on their parents’ taxes. The student could borrow $6,500 for the second year if they continue their studies after their freshman year.

What To Do If You don’t Receive Enough Money?

Students may not be able to afford college costs even with federal loans and financial aid. You should budget for more than tuition. Books, required course materials, travel costs, and living costs are all important. However, if gift aid and student loans don’t suffice, you should explore other options for paying college expenses. 

Lori Pace
Lori Pace

Lori Pace is a single mother of three daughters ages 7 and under. As a working mom from home, she balances kids, work and two crazy dogs with humor and love. Follow Lori as she honestly gives tips and advice based on her own experiences as a single mom!