What Are the Different Types of Federal Financial Aid for Students?

Tricia Christensen
Tricia Christensen

Federal financial aid for students includes the big categories of grants and loans. There are also special loan repayment or college funding programs, in which some students can participate. Another opportunity is work/study grants, which require some work in exchange for a certain amount of pay. Students should also look for available private or state grants or scholarships that could further lower costs.

Students typically have to apply for financial aid to be considered for federal financial aid.
Students typically have to apply for financial aid to be considered for federal financial aid.

In the US, the main grant students may be able to receive is the Pell Grant. It isn’t always enough to pay full tuition, and it generally is only available to students in their first four years of college. For those pupils with the highest economic need, an additional source of funding called the Federal Supplemental Educational Opportunity Grant (FSEOG) may be available, too. Unlike many other types of funding, grants have the significant advantage of not requiring repayment, and students are lucky if the bulk of their aid package comes in the form of grants and scholarships.

Another type of federal financial aid for students is work/study grants. These specifically require students to complete work for an award that also does not have to be repaid. Work might take place on a campus or with identified non-profit or for profit agencies. There is a cap on this type of aid, and some students find they work more profitably or can make more through private sector employment.

Grant programs that have a similar feel require students to work before or after attending school in specific fields. The TEACH grant is offered to individuals who will teach or perform some other types of work in identified communities of high need. While working, teachers get to keep any remuneration and a certain percentage of their grants/loans are forgiven each year. Military service grants are also available for military personnel and sometimes their spouses or children, which can award funds to partially or totally pay for college.

Loans are the other large source of federal financial aid for students, and they often are more depended upon than grants because they are available to more people and offer higher amounts of money. One of the most common loan types is the Federal Direct Loan, which can be subsidized or unsubsidized. The subsidized loan award is income-dependent and has the advantage of not accruing interest during deferment periods. Unsubsidized loans do accrue interest at a quicker rate, but almost any student can obtain them because they are not awarded based on income or credit rating.

Even with loans and grants, federal financial aid for students isn’t always adequate. To obtain more money, an option is a Graduate or Parent PLUS loan. People with good credit ratings may take advantage of these, borrowing additional money to a maximum specified amount. Parent PLUS loans usually require payments right away, but Graduate PLUS loans may have payments deferred until after graduation. This type of federal financial aid for students is not always attractive because it has much higher interest rates than direct loans.

Federal government assistance should never be considered the only possibility for educational funding. There are many regional and private granting agencies offering assistance that may significantly raise a student’s financial aid award. Speaking to financial aid counselors and university scholarship office representatives is a good way to obtain information about these other opportunities. Some students might also qualify for additional sources of federal support like food stamps, welfare payments, or social security or disability payments.

Tricia Christensen
Tricia Christensen

Tricia has a Literature degree from Sonoma State University and has been a frequent wiseGEEK contributor for many years. She is especially passionate about reading and writing, although her other interests include medicine, art, film, history, politics, ethics, and religion. Tricia lives in Northern California and is currently working on her first novel.

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