Do I Have to Pay Back Grants

Do I Have to Pay Back Grants?

Updated on November 12, 2024

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Grants are a fantastic financial boost for students, offering funds that don't need to be repaid, provided all conditions are met. Typically awarded based on financial need, they help lighten the the burden of college expenses. By sticking to the grant's terms, students can enjoy the benefits without worrying about repayment. However, missing the mark on these requirements might mean having to return any unearned funds.

These financial awards are versatile, covering a wide array of educational costs—from tuition and mandatory fees to textbooks, essential supplies such as laptops, and even accommodation and meal plans. The sources of grants are diverse, including federal and state governments, educational institutions, public agencies, and private entities. Each of these sources establishes its own set of eligibility requirements and outlines the consequences should a recipient become ineligible.

By understanding the nature of grants and the commitments they entail, students can effectively leverage this form of financial aid to substantially reduce their college-related expenses, making higher education more accessible and less financially daunting.

Reasons Why You Might Have to Repay Your Grant

None of us can see the future, but we can prepare ourselves with the necessary knowledge to be the most successful. Often these situations vary based on the program, so here’s some examples of when you may have to repay that gift aid.

Grants will need to be repaid either in full or in part when you:

Withdraw early from the specific program that the grant was given to you for
Change your enrollment status (changing your enrollment status from a full-time student to a part-time student will reduce the amount of your grant)
Receive other scholarships or grants that reduce your need for federal aid– in general, your school will reduce your federal student loans first before reducing your federal grants
You don’t meet the requirements for your service obligation as in the case of a TEACH Grant service obligation

Typically, grants are provided as form of financial aid to help you cover the costs of an academic term, meaning this money is often sent to your school on your behalf to cover each specific enrollment period. When it comes to withdrawing from the school semester or year, you need to complete at least 60% of the period of enrollment the grant was intended for. If you complete less than 60%, the school is required to determine how much of your financial aid you earned and you may be required to return the unearned funds to the U.S. Department of Education. If you didn’t earn all your federal grant, there is some grant protection to limit the amount of grants that would need to be returned.

Any time federal student aid funds are returned, this does not change the amount of money you have agreed to pay the school. You may end up with an outstanding balance and you will have to pay the school. If you need to withdraw from school, make sure to talk with the financial aid office to understand the consequences of withdrawing during the school year.

If you end up having to repay your grant in part or in full, your school will notify you and give you a specific time frame to either repay the grant in full or to set up a repayment plan. Depending on the arrangement, the school may turn the grant into a debt and send it to the U.S. Department of Education to collect or keep the debt and allow you to make payments directly to the school.

Federal Grants

If you attend a school participating in federal student aid, you may be awarded federal grants by the federal government upon completion of the FAFSA. There are 4 types of federal grants awarded:

Federal Pell Grants: usually awarded to undergraduate students who have yet to earn a bachelor’s degree. Pell Grants are generally offered to students with financial need, and the amount awarded will be based on your expected family contribution, cost of attendance, and if you are enrolled full- or part-time.
Federal Supplemental Educational Opportunity Grants (FSEOG): awarded to undergraduate students with exceptional financial need at participating schools. Schools who offer FSEOG will give grants to students with the most financial need. Once the school’s FSEOG funds have been exhausted, no more grants will be awarded until the next school year. It’s important to apply for federal aid by filling out the FAFSA as early as possible to be considered for FSEOG grants!
Iraq and Afghanistan Service Grants: eligible students must have a parent or guardian who perished as a result of military service in Iraq or Afghanistan after the events of 9/11, and the student must have been under 24 years old or enrolled in college at least half-time at the time of the parent or guardian’s death. This is only available for undergraduate students who are not eligible for a Pell Grant based on their EFC (expected family contribution).
Teacher Education Assistance for College and Higher Education Grant (TEACH) : for this grant you need to be enrolled as a undergrad, post baccalaureate, or grad student at a school that participates in the TEACH Grant Program as well as enrolled in the TEACH Grant eligible program, while maintaining specific academic scores.

A TEACH Grant is unique because accepting a TEACH Grant means that you are committing to a teaching service obligation after you graduate or cease enrollment from the institution where you received the TEACH Grant. Failure to do so will convert this grant into an unsubsidized loan. Each year you receive a TEACH Grant, you will be required to complete TEACH Grant counseling where all the terms and conditions of the grant are explained.

When you receive a TEACH Grant, you need to sign a TEACH Grant Agreement to Serve or Repay. The Agreement states that you agree to teach full-time for at least four school years as a highly qualified elementary or secondary school teacher in a high need field for a school serving low-income students. You have eight years after graduation (or separation from the school where you received your TEACH Grant) to complete the requirements before the grant is converted to a Direct Unsubsidized Loan that must be repaid in full with interest.

State Grants

Almost every state’s education department has at least one grant or scholarship available to local residents as well as a list of programs for additional student aid. Most often, states require students to attend an in-state school, but that’s not always the case. Check out State Financial Aid Programs to see what grants and other aid your state has to offer you!

University and College Grants

Going directly to your college, university, or trade school and asking the financial aid office about grants may yield surprising results. When it comes to private universities, they tend to have access to grant funds that used to help attract new students and increase enrollment.

Public Grants

Many state and local groups who work closely with the higher education community offer small grants for students who qualify. Check the alumni association for your local high school, as well as your local city or county agencies for grants for students in their jurisdiction who are attending a local or state college.

Private Grants

Corporations and businesses who are looking to attract future employees often offer financial assistance to students with specific educational goals that align with the company’s needs. Often these organizations will also have work-study programs to benefit students. Check with companies in the field you are looking to enter to see who might be currently looking to attract and invest in new student talent at their companies.

Finding Free Money for College

Just like grants can be free money that goes toward your education, scholarships are also a gift-aid that will never need to be repaid. With the help of scholarship sites, you can find relevant scholarships to help you invest wisely in your future. Some sites offer scholarships simply for filling out a quick no-essay entry form.