4 Types of Financial Aid You Don’t Have to Pay Back

4 Types of Financial Aid You Don’t Have to Pay Back

With college costs rising, many students are prioritizing financial aid they don’t have to pay back to help reduce the amount of student loans they need to borrow. We’ve put together a summary of four types of financial aid that typically don’t require repayment to assist you in determining what type of funding may benefit you the most.


Grants are funds that do not require repayment and are typically issued by federal or state organizations, colleges or universities, or nonprofit organizations. The federal government issues Federal PELL Grants to those who qualify, based on their Free Application for Federal Student Aid (FAFSA) information. Depending on your location, state grants may be available. In Pennsylvania, PHEAA awards state grants to those who demonstrate financial need based on their FAFSA form.

Many grants require you to maintain academic progress or continue to demonstrate financial need. If you’re receiving grants, be sure to research what’s required of you as a student to continue receiving these types of funds.


A scholarship is financial aid awarded to a student based on merit or other criteria determined by the issuer. Typically, scholarships are based on academic achievements, athletics, community involvement, or financial need. Scholarships can be issued as a one-time award or can be recurring, providing funding for students each year. When awarded, scholarships are sent to the student accounts office and applied to the student’s tuition bill.

Scholarships can come from a variety of sources, both external and internal. External scholarships may be awarded by businesses, charities, or even credit unions. Internal scholarships are issued by the college itself and often have specific criteria that students must meet to keep receiving the funds. Keep in mind that external scholarships can be applied to almost any school, while internal scholarships may only be applied to the school awarding the aid.

Like grants, scholarships often require you to maintain academic progress or continue to demonstrate financial need. If you’re receiving a scholarship, research what requirements you must meet each semester to keep your award.

Work-Study Programs

Work-study programs are often based on financial need and offer students the opportunity to earn money while working on campus. One benefit of these programs is that earnings you receive aren’t included in your FAFSA calculations. If no work is available, students can use those hours for studying and schoolwork. Work-study students will receive a paycheck for any hours worked through the program. These funds can be used for educational or living expenses and may be applied to their student loan balances to help reduce their overall debt load. In addition to earning a paycheck, students can add their experience to their resume, aiding them when job hunting in the future.

Work-study positions are limited and may not be offered at all college campuses. To be eligible, you’ll need to complete your FAFSA and other financial aid paperwork each year. Work-study funds are not guaranteed from year to year.

Employee Tuition Assistance

Many employers are expanding their benefit options by offering tuition assistance to their employees. This type of funding is often provided in two ways. Employers can pay for the cost of tuition upfront before classes begin or they can reimburse the cost of tuition once classes are completed and a passing grade is achieved.

Receiving tuition assistance is a great way to offset the cost of college for those who are also working. Oftentimes, there’s a maximum amount of assistance an employer can provide before there are tax implications for the employee. Keep this in mind when discussing any tuition assistance options with your human resources department. Before you accept this type of funding, be sure to determine if you’ll be responsible for paying back any funds if you leave the company or don’t complete your program.

Know What to Expect

While the types of financial aid listed above typically don’t require repayment, there are some instances where repayment may be required if you don’t follow the rules of the program. Be sure to do your research as you apply for financial aid so you can be sure you’re meeting any requirements. For more financial tips and tools, visit our WalletWorks page.

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.