Grants. Loans. Scholarships. Work-Study. They're all types of financial aid, but they're definitely not created alike. So, what are the differences? Here's the basics:

• Grants are financial aid you don't have to pay back.
• Work-Study lets you work and earn money to help pay for school.
• Loans are borrowed money that you must repay with interest.
• Undergraduates may receive all three types of financial aid.
• Graduate students may receive loans or Federal Work-Study, but not Federal Pell Grants or FSEOG.
• Not all schools take part in all the programs.
• To find out which programs are available at a particular school, contact the financial aid office at your university. Apply as soon after January 1 as you can—applications won't be processed before then. The federal deadline for submitting your application is June 30, but each school sets its own deadlines, usually much earlier in the year. To find out the deadline at your school, check with your financial aid office.

Major U.S. Financial Aid Programs

The U.S. Department of Education has the following major financial aid programs for U.S. citizens and eligible non-citizens studying in the U.S.:

Federal Pell Grants
Federal Stafford Loans
Federal Parent Loan for Undergraduate Students (PLUS)
Consolidation Loans
Federal Supplemental Educational Opportunity Grants (FSEOG)
Federal Work-Study (FWS)
Federal Perkins Loans

Federal Pell Grants

The Pell grant is federally funded and is awarded to families who demonstrate high financial need. All financial aid applicants must apply by filing the Free Application for Federal Student Aid (FAFSA) form by the posted deadline. Grants are available to students pursuing their first baccalaureate degrees. Funds may be used for tuition, fees, books, room, board, or other personal expenses. Current awards range as high as $3,750 per academic year.

Federal Stafford Loans (Subsidized and Unsubsidized)

Stafford loans are estimated and adjusted due to changes in enrollment status and/or federal, state, or college funding. Eligibility for the Stafford loan is determined from the information you submit on the FAFSA form. Students considered to be "Need Based" qualify for the Subsidized Stafford Loan (no interest while attending school). Students who do not demonstrate financial need may borrow from the Unsubsidized Stafford Loan (interest is accruing while in school). Award amounts are determined by the student grade level: Freshmen (0-29 units) $2,625, Sophomore (30-59 units) $3,500, Junior and Senior (60 + units) $5,500. The interest rate for the Stafford loan is variable, based on the 91-day T-bill plus 2.5 percent in school (unsubsidized only), and 3.1 plus in repayment. Repayment begins six months after graduation or after a student drops below half-time status.

Federal Parent Loan for Undergraduate Students (PLUS)

The Federal Parent Loan program is for the parents of dependent undergraduate students. Parents may borrow up to the cost of attendance minus any other financial assistance that the student is receiving. PLUS loans are estimated and adjusted due to changes in enrollment status and/or federal, state or college funding. PLUS loans are based, in part, on credit and are subject to approval by the lending institution. PLUS loans are made by private lending institutions such as banks, savings and loan associations, and credit unions. The interest rate on a PLUS loan is variable, with a maximum of 9 percent. Income level is not a criterion for determining eligibility for this loan. A loan origination fee of 4 percent will be deducted from the loan proceeds by the bank prior to disbursement of the loan.

Consolidation Loans

A Consolidation Loan allows the borrower to consolidate several types of federal student loans, with various repayment schedules, into one loan. If you have more than one loan, a Consolidation Loan simplifies the repayment process because you make only one payment per month. Also, the interest rate on the Consolidation Loan may be lower than what you're currently paying on one or more of your loans. Both the Direct Loan Program and the Federal Family Education Loan (FFEL) Program offer consolidation loans. Direct Consolidation Loans are available from the U.S. Department of Education. FFEL Consolidation Loans are available from participating lenders such as banks, credit unions, and savings and loan associations.

Federal Supplemental Education Opportunity Grants (FSEOG)

The FSEOG is available to families who demonstrate high financial need. Normally, the FSEOG is offered along with the Pell Grant. The current amount of this grant is $1,000—$2,000 per academic year. The grant amount is based on availability of funds and the timeliness of application.

Federal Work-Study Program

Federal Work-Study provides an opportunity for a student to work while enrolled in college. Most of the jobs are campus-based. Through the Federal Work-Study program the student may earn up to the amount of their award by working for an on-campus employer—or off-campus nonprofit—in an approved Federal Work-Study job. Wages are paid in part by the federal government and in part by the college. An applicant must demonstrate financial need to qualify for this program. Award amounts are based on availability of funds and number of applicants.

Federal Perkins Loans

The Federal Perkins loan is available to students who demonstrate financial need. The loan has a 5 percent interest rate, and repayment begins nine months after a student drops below half-time status, or after a student graduates. The interest does not begin to accrue until repayment. The current award amount for undergraduates is up to $4,000 per academic year, and up to $6,000 per academic year for graduate or professional study.

Information current as excerpted from the 2002-2003 "Student Guide," prepared by the U.S. Department of Education, and may change per government regulations.