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The cost of college continues to rise in the United States. Even so, having a college degree is more important than ever these days when entering the job market. Many students take out loans to pay for their tuition and living expenses while enrolled in school, often in addition to working. However, there is another option for those who need money to continue their schooling and that comes in the form of federal student grants.
Federal student grants are a source of government financial aid for individuals to pay for college or a technical school. In contrast to a student loan, a federal grant does not need to be repaid except in very limited circumstances. Depending on the grant, you can use the funds at either a private and public university, community college, some career, and vocational schools, as well as some online schools. There are thousands of schools across the country that partner with the federal government to supply these grants, and the money can be used for college costs including tuition, room and board, textbooks, and fees.
These grants are funded by Congress and directed through the Department of Education (DoE). Some of the grants are designed so that any qualifying student can receive them, while others have funding caps regardless of how many students qualify. In some cases, such as with the Pell Grant, the DoE can borrow from future funds to ensure all qualifying students are able to access the grant.
The specific grant program you apply for will dictate the eligibility requirements, but in general, you must show financial need to be awarded a grant. Additional eligibility criteria may be based on the level of education you’ve already achieved, your income level (or your family’s income level if you’re a dependent student), what school you plan on attending, the field of work you plan on studying, your parents’ past military service, or maintaining satisfactory academic progress.
To evaluate your financial circumstances and determine what aid packages you qualify for, the DoE will calculate your estimated family contribution (EFC) after you fill out the Free Application for Federal Student Aid (FAFSA) form. The EFC is not a direct reflection of the amount of money your family (or you individually) has to pay for college. Rather, it’s a formula used to determine how much aid you’re eligible for and how much your family can reasonably contribute. If you’re a dependent student (ie. still financially supported by one or both parents), the EFC will consider your family’s income, assets, benefits, family size, and number of dependents currently enrolled in post-secondary education. For independent students, you will use your own information for calculating EFC and this will all be reported to the Dept. of Education through your FAFSA form.
College students have different financial needs and goals. To best meet these needs, there are four main federal grant programs that provide financial assistance. These grants are typically reserved for low-income students and the grants typically do not need to be repaid. Federal student grants are an indispensable resource for students who are struggling to pay for college.
The Pell Grant is currently the largest grant program run by the Department of Education. It was initially signed into law in 1965 and has since awarded money to over 5 million students. The Federal Pell Grant is reserved for students who show “exceptional financial need,” and who have not yet received a bachelor’s, graduate, or professional degree. You may also be eligible if one of your parents was an active duty service member who died in the Iraq or Afghanistan Wars while in service. Pell Grants funds are sent directly from the DoE to the school you’re enrolled in and their financial aid office will award enough money to each eligible student.
The average amount you can receive depends largely on your income level. However, the federal government sets the maximum amount of aid you can receive, and for the 2022-23 school year (starting July 1 and ending June 30) it’s capped at $6,895.
Your actual award amount will be based on your Estimated Family Contribution (EFC), whether you’re enrolled full or part time, the costs of attendance at your school, and whether you plan on attending for the full academic year. In some cases, you can receive additional Pell Grant funds if you are enrolled for a third term, such as summer, and this is referred to as a “year-round Pell”.
You can only receive the Pell Grant for a total of 12 terms (or six years total assuming two terms per year, though if you’re receiving a year-round Pell this total time will be shorter). Your award amount will not be affected by other federal or state financial aid you receive or federal student scholarships, and there are no age requirements for the grant. It’s worth noting that federal law prohibits anyone who is incarcerated from becoming a Pell Grant recipient.
Unlike the Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG) program is not administered by the federal government. Rather, each participating school manages these grants individually and you must go through the school’s financial aid office for these funds. However, you still must complete a FAFSA form to apply and the amount you’re awarded will be based on your financial need and your EFC. Keep in mind that you can only apply for an FSEOG if you’re an undergraduate student.
In contrast to the Pell Grant, which receives its funding through the DoE and Congress, participating schools receive a set dollar amount for FSEOG. Once it’s allotted to students, no more aid is available. The total amount given to each school can fluctuate from year to year, so it’s important to apply as early as possible for this grant.
FSEOG Grants range from $100 to $4,000 a year, but this amount depends on many factors in addition to your financial qualifications. For example, FSEOG awards may be reduced if you’re receiving student financial aid from other sources or depending on the amount your particular school has to offer. However, if you’ve already received a Pell Grant, your application for FSEOG will be prioritized.
The Teacher Education Assistance for College and Higher Education (TEACH) Grant is unique among federal grants since you have to commit to a specific degree and also complete a service obligation after graduation. Like other grants, you are not expected to pay this money back except if you fail to meet the terms of your service commitment. All recipients must sign a “TEACH Grant Agreement to Serve or Repay.” If you do not complete your service then your grant effectively becomes a direct loan that you’re required to pay back in full with interest.
TEACH Grants are limited to $4,000 per year and can be used at any participating program that prepares you to teach as a highly-qualified teacher in a high-need field. This typically means you’ll be earning either a bachelor’s or master’s degree. Currently, high-need fields are mathematics, science, bilingual education, reading specialists, special education, and foreign languages. There are also opportunities for state education agencies to deem a teaching field “high-need” in their particular state. The schools themselves get to decide which of their programs are eligible for the TEACH Grant, so you should always contact the financial aid office for your prospective schools before enrolling to ensure you can qualify.
The post-graduation service obligation requires you to teach in a high-needs field for four years at either the elementary or secondary level in a low-income school, and you have eight years from graduation to complete this. You can earn the TEACH Grant more than once, but you will be required to complete a separate four-year service obligation for each full grant received.
The Iraq and Afghanistan Service Grant is the most restrictive of the federal student grants. You can only qualify if your EFC is too high to be eligible for a Pell Grant, but you meet all other criteria. Additionally, you must have a parent or guardian who served in Iraq or Afghanistan after 9/11 and died as a result of their service. At the time of their death, you must have been under the age of 24 or enrolled as a full or part-time college student.
Each year the maximum amount awarded changes, but for the 2021-22 school year the grant was capped at $6,495 – however, it cannot be higher than your annual tuition.
To complete a college grant application or apply for a standard federal student loan, you must first submit a FAFSA form. This form requires basic personal information and details from your (or your parents’) annual tax returns and W-2s. You may also need information from bank statements, investments, or untaxed income. The fastest way to fill out the FAFSA is online and you can do this by setting up an FSA ID which will allow you to sign electronically and sign loan contracts. Note that if you’re a dependent student, your parents will also need to obtain an FSA ID to sign as well.
On the form, you can list colleges that you wish to receive this information, and when filing online you can list up to 10. This can be especially useful for grants like the FSEOG or other state grants you may qualify for like the Cal Grant or Texas Grant. In general, the order you list these schools doesn’t matter, but some state schools have requirements for certain grants, so you should always check with your preferred schools before filling out the form.
After your FAFSA has been evaluated, you’ll receive a student aid report (SAR) that will outline what kind of state and federal aid you are eligible to receive.
Ideally, any college grant money you receive will never have to be repaid, much like a scholarship. However, all grants come with guidelines and requirements that must be met. For example, if you have a change in your enrollment status such as dropping from full to part-time or taking a semester or year off, you may lose your grant money and be asked to repay money you’ve already received.
You may also have to repay your grant if it was contingent on fulfilling a work obligation (like the TEACH grant). If you fail to satisfy the requirements, your grant will be converted into a loan.
If you no longer qualify for the grant, you can lose funding. This can happen if you are awarded additional scholarships or grants that affect your overall financial need, causing you to lose funding for a need-based grant.
If you’re like most young people across the country and are concerned about how you’ll pay for college, consider looking into the various federal student aid programs administered by the U.S. government as well as state and private funding options.
By assembling different sources like loans, grants, and scholarships you can dramatically reduce your out-of-pocket expenses and help make your college dream a reality. If you can show high financial need and submit your FAFSA early, you can usually get a considerable amount of money from federal, state, or collegiate grant programs.