State Treasurer of Iowa

Tip from the Treasurer: Scholarships, Grants and Loans, Oh My!

Since 1998, my office has been dedicated to helping Iowans save for the future education of their loved ones through our College Savings Iowa 529 Plan. However, as the cost of post-secondary education continues to rise, I have grown increasingly aware of the importance of other funding sources to help pay for educational expenses. Understanding these sources, collectively known as financial aid, is paramount in deciding how to best fund higher education.

  1. Scholarships: Money awarded via a scholarship does not have to be repaid. Scholarships may come directly from a learning institution, local or state government, nonprofit organization, corporation or even private individuals. Scholarships are generally merit-based and can be awarded for any reason, such as academic achievement, a proven talent or a unique characteristic, among others.
  2. Grants: As with scholarships, grant money does not have to be repaid. Grants are need-based awards offered by the federal or state governments, nonprofits and learning institutions. Federal Pell Grants, for instance, are awarded entirely based on financial need. Some grants, such as the TEACH Grant, require a commitment to serve the community in a specialized way after graduating from a post-secondary institution. 
  3. Work-study: The Federal Work-Study program offers part-time jobs to students who qualify based on financial need. Jobs can be located on or off campus and typically relate to a student’s field of study or support the community in some way.
  4. Student Loans: A loan is the part of the financial aid package that does need to be repaid, with interest. U.S. government loans are provided by banks, credit unions, non-profit lenders or the federal government and most are based on financial need. Federal loans are generally lower interest, while loans offered by private financial institutions may have a higher interest rate and are based on an applicant’s credit, not necessarily financial need. Most loans include a repayment schedule that begins as soon as six months after graduation, so it’s best to understand what is expected from the loan before accepting it.
For more information on how to best prepare and pay for higher education, check out this interactive tool offered by
© 2020 State Treasurer of Iowa. All rights reserved.