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Federal Grants vs. Federal Loans

When discussing financial aid, a common misconception for new students is grants and loans. What is the difference? Many students believe financial aid only deals with money that is not repaid. Not the case. Financial aid (through the U.S. Department of Education) does encompass both federal grants and federal loans. A student doesn’t have to actually use both, but when discussing financial aid, both grants and loans fall under it’s umbrella.


A student seeking financial aid from the U.S. Department of Education can apply for federal aid (grants and loans) by completing the Free Application for Federal Student Aid (FAFSA). The FAFSA takes about 20-30 minutes to complete and is completely free. It is an application to determine what type of aid and how much aid a student can use while attending college. Taxes from the previous year are required to complete the FAFSA.


Again, grant money does not need to be repaid and is based on financial need. The US Department of Education gives each student an Estimated Family Contribution (EFC) code when they complete their FAFSA. This EFC code is used to determine financial need. The lower the EFC typically means the more grant money a student can receive. The maximum amount of the Federal Pell Grant for the 2017-2018 year is $5,920.


Loans, on the other hand, do have to be paid back. The U.S. Department of Education offers Direct Subsidized Loans and Direct Unsubsidized Loans for those students who qualify. This loan is also referred to as a Stafford loan. The government will pay the interest on the subsidized portion of the loan while a student is in school. The unsubsidized interest is the responsibility of the student.

The amount a student can receive each academic year depends on the student’s year in school and whether they are an independent or dependent student. There are several different repayment options once a student graduates or ceases enrollment. Typically a student has between 10 and 25 years to pay back their loan.


When thinking about applying and using federal financial aid, it is important to educate yourself on the application process, the interest rates, the repayment process, etc. The U.S. Department of Education has put together a comprehensive amount of information to educate students about all aspects of federal funding.  For more information about funding your education, visit https://www.federalstudentaid.ed.gov.

For more information on our financing your education at CCBS, contact our Admissions Team today. Or, if you have general questions…download our eBook “9 Answers to Your Questions About a Biblical Education.”