<p>You have to pay back loans. You are just given more time to pay for what you owe, and you pay for that privilege with interest. The subsidized loans do not accrue interest while you are still a full time undergrad, but then they start racking up those charges too.</p>
<p>So, yes, grants are MUCH better. They are free money. Also, loans are put into the financial aid package, dollar for dollar as grants, even when the only difference between those Direct Loans you get with subsidized interest and those that most anyone even with no need can take is the interest subsidy. But they count the whole face amount as financial aid. Also, when you get those Direct Loans in your package, they are going towards your financial aid, and you can’t use them towards your EFC which those who don’t nave those loans in their packages and those who have no financial need can use them towards the Family EFC. Rather unfair, if you ask me.</p>