Accepting Financial Aid

First, accept the financial aid funds you don’t have to pay back.

Accepting Financial Aid

When your school financial aid office sends you an aid offer, they’ll ask you to indicate which financial aid you want. Look carefully at your options and make an informed decision.

Choosing the Best Financial Aid to Accept
Deciding Which Student Loans to Accept
Informing Your School About Aid You’ll Accept

Choosing the Best Financial Aid to Accept

Keep the following in mind when you get an aid offer and are deciding which aid is the best to accept:

  • Free money first (e.g., scholarships, grants)
  • Earned money second (e.g., work-study)
  • Borrowed money last (e.g., federal student loans)

Start from the top of this table and work your way down:

Best Order to Accept

Type of Aid

What to Keep in Mind


Scholarships and grants

Make sure you understand the conditions you must meet to stay eligible for the scholarship or grant. For instance, you might have to maintain a certain grade-point average to continue receiving a scholarship, or your TEACH Grant might turn into a loan if you don’t teach for a certain number of years under specific circumstances.



You don’t have to pay the money back, but you do have to work for it, so take into account that you’ll have to balance your time between work and studying. Bonus: Research has shown that students who work part-time jobs manage their time better than those who don’t!


Federal student loans


You’ll have to repay the money with interest. Subsidized loans don’t generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan. Next, accept an unsubsidized loan before a PLUS loan.


Loans from your state or your college

You’ll have to repay the money with interest, and the terms of the loan might not be as good as those of a federal student loan. Be sure to read all the fine print before you borrow.


Private loans

You’ll have to repay the money with interest, and the terms and conditions of the loan are usually not as good as those of a federal student loan. Be sure to read all the fine print and borrow wisely.

Many schools also offer tuition payment plans (a monthly interest-free payment toward tuition). This type of plan may help reduce the amount you need to take out in loans. Ask your financial aid office if such a plan is available.

Deciding Which Student Loans to Accept

If you must accept loans, accept the ones with the most favorable terms and conditions. Usually, that means choosing the federal student loans offered to you. If you are considering getting a state loan, school loan, or private student loan, you should learn about the differences between federal and other loans.

If you have any questions or don’t understand what types of loans are in your aid offer, contact the school. Make sure you understand what you’re accepting and the repayment terms.?

Borrow only what you need! If your living expenses are not going to be as high as the amount estimated by your school, you have the right to turn down the loan or to request a lower loan amount. In the aid offer, your school will tell you how to do this.

To determine how much loan money to accept, make a list of your college and living expenses and the resources you’ll have available to pay them; in other words, make a budget to help ensure you borrow only what you need.

Remember: If you don’t accept the full amount of the loan you’re eligible for, you can increase the amount later.

Informing Your School About Aid You’ll Accept

Your student aid offer will include directions on accepting aid. Follow those directions carefully. You might have to enter the amounts you’re accepting in an online form and then submit the form. If you receive a paper aid offer, you might have to sign it and mail it back to the school.

Accepting a loan or grant listed in the aid offer may involve additional steps, which vary depending on the type of loan or grant you’re receiving. Saying yes may be as simple as signing a promissory note—a contract between you and the lender* that specifies the terms and conditions of the loan—or it may include entrance counseling if this is your first federal loan.

By signing the promissory note, you are promising to repay your student loan. The financial aid office will guide you through the paperwork or direct you to the online Master Promissory Note if appropriate.

*If you take out a loan from the Direct Loan Program, the U.S. Department of Education will be your lender.