Which type of financial aid is classified as "free money"?

Grants are classified as "free money" because they do not have to be repaid. These funds are typically awarded based on financial need or specific criteria set by the grantor, which can include academic achievement, field of study, or even demographic factors. The key aspect of grants is that they are essentially gifts to the student to help cover educational expenses, making them a vital form of financial aid for those who may not have the means to pay for college without assistance.

In contrast, student loans must be repaid, often with interest, which turns them into a financial obligation rather than free assistance. Work-study programs provide students the opportunity to earn money through part-time jobs, but this still requires students to work for their financial aid, rather than receiving it outright. Scholarships can also be considered free money, as they do not need to be repaid, but they typically have specific eligibility criteria or are awarded based on merit. While both grants and scholarships provide "free money," in the context of the question, grants are the typical example referenced when discussing financial aid classifications.