Grants, Loans, and Work Study

The Basics of Financial Aid

Female Student with Books
What’s the Difference? Grants vs. Loans vs. Work Study

So you’re heading off to college and are trying to figure out how you’re going to pay for it. You filled out the FAFSA and applied for financial aid and you’ve just heard back.

You’ve been offered grants, loans, and work study. What do they mean? What’s the difference? And, what should you take?

Here we’ll talk about the basics of the three main types of financial aid and give you the information you need to know about each.


Grants are funds that do not need to be repaid. Grants are offered by both public and private organizations. The federal government offers grants to many low-income students who have trouble paying for school. State governments also offer grants as do many colleges, universities and other private organizations.


Unlike grants, loans are funds that do need to be repaid. And, like car loans or mortgages, student loans need to be repaid, with interest. Before you take a student loan make sure that you’ll be comfortable paying it back.

Taking loans is a big decision and it’s complicated by the many types of loans available. There are two types of student loans: public and private. Public loans are financed by the government while private loans are financed by a financial institution Typically, public loans are available at lower interest rates, meaning that it will cost you less to pay them back.

Work Study

Still different from grants and loans, work study is money that you earn as you go. It provides you with a stipend and an hourly wage at an on-campus job. Work study money in currently capped at $2,500 per year, so you shouldn’t count on it to finance the majority of your education.

Typical, work study jobs may have you shelving books in the library, serving food in the cafeteria, or assisting in the admissions office.

Work study jobs are offered through the federal government, but are administered through your college’s financial aid office.

And, that’s it— the basics of financial aid. Knowing more about the aid that’s available should help you decide how to finance your education.