Students typically take out student loans to pay for college after they’ve exhausted all of their scholarship, grant, and work-study options. Scholarships and grants are considered “free money” because they typically don’t have to be repaid. Work-study is considered “earned money” because you trade your time for financial aid. Loans, however, are considered “borrowed money” because they need to be repaid with interest.

You should only borrow money after scholarship, grant, and work-study options are exhausted.