Final answer:
In terms of financial aid, "gift aid" refers to grants, which do not need to be repaid. This is distinct from loans, such as subsidized or unsubsidized loans, which must be repaid with interest. Savings can come from personal, government, or foreign sources. The correct option is B. Grants.
Step-by-step explanation:
The type of financial aid known as "gift aid" is B. Grants. Gift aid is money that does not need to be repaid and can come in the form of scholarships or grants. Grants are typically awarded based on financial need, while scholarships may be awarded for academic achievements, talents, or other criteria. Unlike grants and scholarships, loans must be repaid with interest, and work-study programs provide part-time employment to help students earn money to pay for educational expenses.
Grants vs. Loans: Grants and loans are two fundamental types of financial aid, but they differ significantly. Grants are usually need-based and do not require repayment, thus benefiting the recipient. On the other hand, loans are borrowed funds that must be repaid over time with interest. This interest can be either subsidized or unsubsidized. Subsidized loans do not accrue interest while a student is in school or during other deferment periods. Unsubsidized loans start accruing interest from the time the loan is disbursed.
Sources of Savings: Savings can come from various sources, such as personal savings, government savings, and foreign savings. Sometimes, grants in the form of foreign aid from developed nations are provided, supplementing these savings. However, they represent only a small fraction of the total.