By submitting the FAFSA®, you’re automatically considered for federal grants, work-study, and loans. However, the FAFSA® is also often used to determine your eligibility for non-federal aid too, like state aid, college scholarships, and some external scholarships.
“Financial aid” is a general term that includes three types of aid:
Grants and scholarships: This is “free money” that you do NOT need to pay back.
Work-study: This is money that you have a right to, but that you must work for. Once you’ve worked for it, you’ve “earned” it and do NOT need to pay it back.
Loans: This is money you borrow from the government (or a private company), and you DO need to pay it back, with interest. In other words, you need to repay more than you’re actually borrowing. However, federal government loans often are cheaper than private company loans, and filling out the FAFSA® is the only way to get access to government loans.