Understanding Your FAFSA Package

Getting financial aid is the only way many students are able to attend college, and completing the FAFSA is the first step. Aid can be in the form of loans or grants. Read this blog to get an overview of the different types of aid offered in a FAFSA package.

The Basics of the FAFSA

Getting ready for college is a big step in a student's life. Many questions run through your mind: what will your roommate be like? What will you major in? But maybe one of the most important questions is: how will you pay for it? That's where financial aid comes in, but understanding the complicated FAFSA language is a whole new problem.

The Free Application for Federal Student Aid, commonly referred to as the FAFSA, is offered by the U.S. Department of Education. Together, with colleges and financial institutions, they find ways to cover the tuition and expense of a college degree. Once you've been accepted to a college, the Federal Student Aid office will put together a package consisting of one or many grants, loans and work study opportunities (scholarships are not included in FAFSA packages).

The Package

Pell grants, Perkins loans, ACG grants - what do they all mean? For some, there is confusion between the difference of a grant and a loan, not to mention the different types.


Loans must be repaid to the government, school or financial establishment that fronts the money for your schooling.

Direct Loan

There are two primary types of loans in the Direct Loan Program that you may receive. Shout with joy if you are granted a Subsidized Stafford loan. The interest for this loan is paid by the government while you are in school (and during any forbearance periods after graduation). Unsubsidized Stafford loans put the interest responsibility on the student. You can pay off the interest while in school or let it accumulate and be added on after you graduate (it's in your best interest to pay it during school).

PLUS loans are also part of the Direct Loan Program and are given to parents and graduate students. This loans can be deferred for graduate students, but interest will accrue. If the loan was secured by a parent, payments can be made immediately or the parent can request a deferment.

Perkins Loan

The Federal Perkins Loans are given to students based on financial need. These loans are low interest (typically 5%) so that they are easier for students (fresh in the job market) to pay back.


The best sight on a FAFSA package is the word grant. This free money is as good as a scholarship. But unlike scholarships, many students can get these, not just one or two. Grants do not need to be repaid, which lowers your final education costs. Keep in mind though that some grants do have additional requirements and additional forms to fill out.

Pell Grant

You can get this grant if you are pursuing a bachelor's degree for the first time. Although, this grant may be awarded to those getting a postbaccalaureate teacher certification. The government factors your financial need, tuition amount, and whether you're going to be a part - or full-time student.

Academic Competitiveness Grant (ACG)

You can receive this grant only if you are eligible for the Pell grant. Money is given to first and second year undergrads who have concluded intensive secondary study. Did you complete an AP course or a college prep course? If so, look further into this grant.


If you want to be a teacher, this grant is for you! Worth up to $4,000 a year, you must sign a contract agreeing to work at a need-based school for at least four years within the first eight years of graduation. If you fail to meet this, the grant will be transferred to an unsubsidized loan.

National SMART Grant

Okay, so you don't want to teach. If you're majoring in technical field, math, liberal arts or a foreign language, you may be eligible for this grant. The SMART grant is given to Pell-eligible students in their third through fifth years of undergraduate studies. You must maintain a 3.0 average to keep this grant.

Federal Work-Study

At first, seeing work-study in your package may not excite you. Until you realize what it means - money flexibility. Yes, studying is difficult and requires as much time out of class as a full-time job. However, if you've been granted federal work-study, you're guaranteed a part-time job and will be paid at least minimum wage. Typically, you'll have the freedom to choose your own hours and work as much or as little as you deem capable.

You'll usually work within the school, although some work-study jobs may be completed at government-run institutions or not-for-profit organizations. This money can be used to offset costs for tuition or books, or be used for personal items that a grant would not have covered. Pizza, anyone?

Now that you understand the FAFSA lingo, see which colleges offer the best financial aid packages!

To continue researching, browse degree options below for course curriculum, prerequisites and financial aid information. Or, learn more about the subject by reading the related articles below:

The schools in the listing below are not free and may include sponsored content but are popular choices among our users. Tuition and costs will vary across programs and locations. Be sure to always request tuition information before starting a program.

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