You passed calculus just fine, but unless you’re planning to be an accountant, your financial aid offer probably looks confusing.

The main things you want to find out are how much it all costs and which parts you’ll have to pay back.

It’s not as complex as it first appears, but you need to keep in mind the bigger picture. You will be spending money on tuition, room, board, books, fees, travel, entertainment, and miscellaneous expenses.

Use our guide below to decode your financial aid package.

    Grants

“Grant” should become your new favorite word.

Grants differ from scholarships in that grants are based on financial need while scholarships are usually based on merit.

Grants are generally given by the government on a financial need basis. When you or your parents filled out the FAFSA (Free Application for Federal Student Aid) or CSS Profile, you might have been allocated some free money for college.

That’s right—free. Grants do not need to be repaid.

Examples of grants are the Federal Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG).

When you filled out the FAFSA, you already applied for these. They are applied directly to your tuition bill. Woo hoo!

    Scholarships

Scholarships have this in common with grants: they don’t need to be repaid either.

Depending on the category of scholarships—and there are a ton—they could be based on merit, need, or type.

Merit: You may need to share your grades, write an essay, or have accomplished something specific to be eligible.

Need: You may need to demonstrate your financial need or be a first-generation college student to be eligible.

Type: You may need to belong to a certain group of people (race, ethnicity, ability, religion, gender, major, etc.) to be eligible.

Scholarships can be awarded by universities, companies, non-profit organizations, or even individuals. There is an overwhelming number of sources of scholarships but most scholarship money comes directly from colleges.

Read the fine print for any scholarships you receive. Is the scholarship renewable, and if so, for how many years? What requirements do you need to meet to continue receiving the scholarship?

    Loans

Student loans are just that—loans for students. Loans need to be repaid.

The exact terms of each loan can vary, but, generally, you don’t have to start paying on a student loan until a few years after you graduate.

Another feature of many student loans is that they have low or no interest, which is good. (Payment on student loan interest is also tax-deductible, so check with a tax professional for guidance.)

Depending on your major, you could be eligible for loan forgiveness programs. Teachers and social workers are in an especially good position to qualify for these programs.

A good rule of thumb is to try to offset your need for loans with as many scholarships as you can.

    Work-Study Programs

A work-study program is an employment option for students in which your paycheck is applied directly toward your tuition. It’s money you earn by working but which can only be spent on education.

Examples of work available in work-study programs are part-time jobs like administration, teaching assistant (TA), research assistant, lab assistant, or other on-campus jobs.

Schools often set aside jobs specifically for students who qualify for work-study programs. You usually qualify based on financial need.

Your qualification can be federal (as assessed by the FAFSA) or institutional (according to independent standards for who qualifies). If you’ve completed the FAFSA, you’ve already done your part for that component. After you’re accepted to an individual university, the college will usually assess your work-study program eligibility.

Work study programs give you excellent work experience on campus without conflicting with your studies and can open doors to internships and post-graduation opportunities.

When you receive your financial aid offer, you should be excited, not confused.

Need more help navigating the winding road of your financial aid package? Ask the university’s financial aid office for clarification. They have helped thousands of students and will be happy to answer questions not addressed on the college website.

College can be a big financial commitment. Understand the details, ask questions, and make the best choice for your future. You can do it.