College aid comes in a few flavors, and they are not the same. The single most important question to ask about any dollar offered to you is simple: do I have to pay this back? Get that straight and the whole picture gets clearer.

: money you keep

A grant is money for school, often based on financial need, that you do not have to pay back. It's as close to free money as it gets. The biggest federal one is the Pell Grant, worth up to $7,395 for the 2026–27 school year for students with the most need. Grants usually come from the government or your school, and your is what determines whether you qualify for the federal ones.

: also money you keep

A scholarship is also money you don't repay, but it's usually awarded for something specific: your grades, a talent, your background, or your field of study. Scholarships can come from your school, local groups, companies, and foundations. You can win more than one, and they stack on top of your other aid. When you're ready to hunt for them, Finding Scholarships You'll Actually Win covers where to look.

Grants and scholarships are gift money. You never pay them back, which makes them the best dollars in your whole aid package. Chase these first.

Loans: money you pay back

A is money you borrow to pay for school and repay later, almost always with (the extra cost of borrowing). A $5,000 loan doesn't stay $5,000; over time you pay back that amount plus interest on top. Loans aren't bad, and many students need them. But borrowed money is the opposite of gift money, so it belongs last in line.

Tip
Federal student loans usually come with lower, fixed rates and more flexible repayment options than private ones. If you do borrow, look at federal loans first.

Putting them in order

Most students use a mix, and that's completely normal. The smart order is the same for everyone: take all the grants and scholarships you can get, then if it's offered, and only then borrow what you truly need.

When your aid offer arrives, you'll see these types side by side. Telling them apart is the first step to reading that letter with confidence.