Do you have to pay back money from the FAFSA? It depends.

When you complete the FAFSA, your school may offer you any one of three types of federal student loans: subsidized loans, unsubsidized loans, or Direct PLUS Loans. The interest rate on federal loans is fixed, and each of these loans needs to be repaid.

If your college costs aren't covered completely by the aid offered through the FAFSA, you may have to take out private student loans as well. You will have to pay those back, and these should be your last option, as private loans often come with worse terms and protections than federal loans.

Types of assistance through FAFSA

You need to complete the FAFSA to determine what type of assistance you qualify for, though you don't have to accept all the financial aid offered to you.

Grants and scholarships, along with work-study money, are types of aid you don't need to repay. The earlier you submit your FAFSA, the more likely aid will still be available — the pool of money is finite. The FAFSA determines your eligibility for a mix of aid:

• Grants: Often given based on exceptional financial need or if you belong to a designated group. There are a couple of federal grants for students with exceptional financial need: one for students who commit to teaching for four years at a low-income school, and another for students whose parent or guardian died serving as a member of the military in Iraq or Afghanistan. Learn more about types of federal grants here.
• Work-study: Often given based on when you apply, your level of financial need, and the amount of money your school has available. Work-study is a type of financial aid that provides part-time positions, such as library receptionists and research assistants, for students with financial need to earn money for academic expenses.
• Scholarships: Often given based on academic merit, athletic talent, or other achievements. Scholarships are offered through your school itself, and the amount of money available depends on the school.
• Student Loans: These DO have to be repaid with interest

You can get various types of aid from the FAFSA, and you'll know what you qualify for once your school gives you your complete financial aid package. You'll need to repay some FAFSA debts, while you won't have to pay back others.

Main types of student loans

Subsidized federal loans

Subsidized loans are given out based on financial need. The government covers the interest on your loan while you're in school, so it doesn't accrue while you're in school or during your six-month grace period. A grace period is a length of time after you graduate before you have to start repaying your loan in full.

Unsubsidized federal loans

Unsubsidized loans don't take financial need into account. Interest begins to accrue immediately and continues to accrue during your six-month grace period. This is a more expensive option than a subsidized loan.

Direct PLUS Loans

Direct PLUS loans don't consider financial need and require a credit check. Graduate and professional students, as well as parents of undergraduate students, can take out Direct Plus Loans. Interest accrues during school and during a six-month grace period.

Types of student financial aid you have to pay back

Not all types of financial aid need to be repaid. However, for the types of financial aid that do require repayment, be sure to read the terms carefully before accepting the aid, so that you understand how much the aid will cost. For instance, many loans require you to repay the loan amount with interest. Here's a list of the types of financial aid you have to pay back:

• Federal student loans. This includes subsidized and unsubsidized student loans. In general, subsidized student loans don't begin accruing interest until you leave school or fall below half-time enrollment.
• Loans from your state or local college. These types of student loans must be repaid with interest. The terms of these loans may not be as favorable as federal student loans.
• Private student loans. Similar to loans from your state or local college, private student loans require repayment with interest and usually don't have terms as good as those you'd get with a federal student loan.

Types of student financial aid you don't have to pay back

Finding financial aid that doesn't need to be repaid can be tricky. But it's often worth the extra work, because it will lessen the financial burden that comes with higher education. Here's a list of student financial aid you don't have to repay:

• Scholarships. These are basically gifts or loans that you don't have to pay back. Be sure to read the terms of each scholarship carefully, as many have strict requirements to stay eligible and receive the money. For instance, you may need to maintain a certain grade-point average to keep the scholarship.
• Grants. This type of financial aid doesn't have to be repaid as long as you fulfill your side of the agreement. For example, a TEACH grant for students who are pursuing a career in teaching requires that these students teach for a specific number of years in a high-need field. If the borrower doesn't follow these requirements, then the grant could turn into a loan that must be repaid.
• Federal work-study. This program requires you to work for the money you are given, but you won't have to repay it. However, some students have a difficult time juggling classes and a job at the same time. So, you'll need to prioritize time management.

Check rates

FAQs on when you have to pay back FAFSA debt