Need-based financial aid
Grants are similar to scholarships in that they are, essentially, free money to put towards the cost of your education. However, unlike scholarships, grants don’t require you to meet certain criteria (such as a consistently high GPA or participation on a sports team). Grants are typically awarded on the basis of financial need. They are also awarded to members of minority groups.
Federal Pell Grants
Most money that is allocated by the federal government to college students comes in the form of student loans. Some of it, however, is distributed as grants. Federal Pell grants are awarded to students who demonstrate a certain level of financial need, which is determined by the information included on their FAFSA applications. In almost all cases, Pell grants are only awarded to undergraduate students.
How much you receive depends not only on your financial need but also on your enrollment status (full- or part-time) and your tuition costs. It is up to your school to decide whether to apply your Pell funds directly to your tuition charges or to give you the money.
In the past, federal grants covered up to two-thirds of many students’ education costs. Today, they cover less than one-third. For the past several years, the maximum Pell grant amount that a student can receive has been just over $4,000. This may increase in the future, but recent cutbacks make it unlikely.
There is no limit to the number of years that a student can receive a Pell grant, although it is required that you remain enrolled in an undergraduate degree program and not have earned a Bachelor’s degree.
In addition to Pell grants, there are other, less common grants awarded by the federal government. These include:
- Federal Supplemental Educational Opportunity Grant (FSEOG). Awarded to students who demonstrate exceptional financial need. Not all schools participate in this program.
- Academic Competitiveness Grant (ACG). A new grant program for first- and second-year students who have completed a rigorous secondary school program and maintain a high level of academic achievement in college.
- National Science and Mathematics Access to Retain Talent Grant (National SMART Grant). A grant program for undergraduate students in the third or fourth year of a program deemed to be critical to national security (science, engineering, technology, mathematics or a foreign language). The student must also maintain a high standard of academic achievement.
Nonfederal grants that are available include:
- State grants. Almost every state in the union has a grant program based on financial need. Some programs target students who are majoring in certain subjects (such as nursing or education) and require students to meet certain requirements upon graduation (such as agreeing to work in a low-income area).
- Institutional grants. In addition to federal and state governments, some colleges and universities award grants. They typically do so when federal and state aid is insufficient or to court a sought-after student.