Federal Student Aid -- a program overseen by the U.S. Department of Education -- provides the majority of financial aid to the nation's college students. Repayment depends on whether a student qualifies for financial assistance in the form of grants, loans or work study; grants and work study don't have to be repaid as long as the student stays in school, but loans must be repaid. Colleges use the Free Application for Federal Student Aid form to determine the types of financial aid, as well as how much, a student can receive.
Free Money in the Form of Grants
Students do not need to pay back federal student grants. The Federal Pell Grant program helps students who have not yet received a bachelor's degree cover the cost of college. The total amount of grant funds a student can receive for an academic year changes annually. The amount is based on factors such as financial need, number of credit hours a student schedules, and the cost for tuition and other education-related expenses.
Refund Calculation for Tuition Adjustment
Although students don't normally have to pay back grant money, if they drop out of college before the end of the academic period for which they received federal financial aid, they are responsible for repaying some of the money. Students must pay back 50 percent of the percentage of financial aid that went toward paying for classes they did not attend. Since the federal government expects students to earn the financial aid funds they receive by staying in school and attending classes, the amount of repayment varies depending on when during the semester a student drops out of school.
Repayment of Student Loan Debt
Colleges use the FAFSA form to determine whether a student qualifies for student loans. Although a student loan is a form of financial aid, repayment terms depend on the loan type and whether the parent or the student borrows the money. Unless a parent requests deferment, repayment on parent loans starts while the student is still in school. If the student borrows the money, the repayment period usually does not begin until after the student completes a degree. Students are required to repay their student loans even if they don't complete their education.
Work-Study Nonrepayable Student Aid
Work-study is a form of student aid awarded to students who need financial help paying for college. The federal government subsidizes a portion of the wages students earn through a work-study program, and students don't have to repay it. Although a work-study award won't reduce the amount of a grant a student receives, some students who accept work-study funds as part of a financial aid package qualify for less in loan funds. Like other forms of federal student aid, school financial aid offices use information from the FAFSA form to determine a student's eligibility.