It doesn’t matter what schools you’re looking at or what type of degree you’re on the hunt for — college isn’t cheap.
For the 2021–22 academic year, private colleges in the US were averaging $38,185 per year in tuition and fees. That’s on the more expensive side of the spectrum — but even out-of-state public colleges were averaging $22,698 per year.
Unfortunately, the vast majority of students don’t have that kind of money sitting in the bank.
That’s why it’s absolutely critical you understand how grants for college work and, more importantly, how you can apply.
This guide explains how grants for college work, the four types of grants, how to apply for grants, and when you have to pay back grants for college.
Before we speed right onto how grants work, let’s pump the brakes for a minute and talk about what grants are.
Simply put, a grant is a financial award that doesn’t need to be repaid. That makes grants a hugely attractive way to pay for college. After all, when you take out a student loan, you’ll be expected to pay every cent of that loan back (plus interest).
On the other hand, grants are literally free cash designed to help you pay for school.
Grants for college are typically provided to students based on the financial needs of each individual. Grants that are awarded to students based on financial need are called “needs-based grants.”
That being said, other considerations often include your ethnic background, academic merit, country of origin, the subject you’ve chosen to study, or a wide range of other eligibility criteria.
For example, you’re also likely to run across merit-based grants that are specific to your school. To get a merit-based grant, you’ll probably need to achieve certain grades and maintain those grade levels to keep your award.
Grants can come from a variety of sources. Private organizations, nonprofits, charities, colleges, and career schools generally offer a range of needs-based and merit-based grants. But the most common sources of grants for college are the US federal government and individual state governments.
The federal government has an annual budget of $32 billion set aside for college student grants, enabling 41% of all American undergraduates to get a federal grant every year. On average, each student lands $5,179 per year in grants for college.
Best of all, the application process is incredibly straightforward. To apply for most federal and state grants for college, all you’ve got to do is submit a Free Application for Federal Student Aid (FAFSA) form.
But we’ll explore the grant application process in more detail shortly. First, let’s break down the different types of federal grants you’re going to want to check out when applying for financial aid.
Federal grants are issued by Federal Student Aid, which is part of the US Department of Education (ED). Federal Student Aid offers several different grants that students can use to pay for their tuition and other expenses at four-year colleges, universities, community colleges, or career schools.
The four most common types of federal grants available are Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Iraq and Afghanistan Service Grants, and Teacher Education Assistance for College and Higher Education (TEACH) Grants.
Each of these four grant types comes with its own unique set of eligibility criteria. To help you get started, let’s talk about the primary differences between each type of federal grant.
The Federal Pell Grant (or “Pell Grant”) is the US Department of Education’s biggest grant program. Every year, 6.8 million college students get a Federal Pell Grant — and the average award is $3,900 per year.
Bearing that in mind, it’s hardly surprising Pell Grants make up the lion’s share of the government’s student aid budget. In fact, Pell Grants take up around $29.6 billion worth of the ED’s annual $32 billion budget.
The Pell Grant is needs-based, and it’s designed for undergraduate students without a bachelor’s degree. But in order to qualify for a Pell Grant, you’ve got to have an Expected Family Contribution (EFC) of less than $6,000.
If you’re unfamiliar with the concept of EFCs, don’t worry. Your EFC is simply the amount of money that the government and your school think you can pay towards your college tuition fees on an annual basis.
This number is determined and given to you after your FAFSA has been reviewed and your financial aid options have been provided.
So, how much can you expect from a Federal Pell Grant?
Again, the exact amount of money you can get through this program varies based on your EFC, the cost of attendance for your college degree, and your status as a full-time student or a part-time student. If you plan to attend school for one full academic year or less, this will also affect your Pell Grant award.
The maximum Federal Pell Grant award you can receive for the 2021/22 academic year is $6,495. This award period started on July 1, 2021, and runs until June 30, 2022.
If you’re eligible for a Federal Pell Grant, you’ll always get at least the full amount you qualify for. Each participating college receives funding from the US Department of Education to pay out Pell Grants to all eligible students it enrolls. That means your school will disburse grant funding to you directly.
It’s also important to note that the money you get from a Federal Pell Grant won’t be affected by any other form of student aid you might receive. That means you’d still get all the Pell Grant money you’re eligible to receive even if your college awarded you loads of merit-based scholarships at the same time.
In some scenarios, you might even be able to get more than the maximum grant award through the Pell Grant program. In fact, eligible students can receive up to 150% of their award for any given year. This is what’s known as a “year-round Pell Grant,” and it works pretty simply.
For example, let’s say you’re eligible to get a $4,000 grant for an academic year as a full-time undergraduate student. That means you’ll probably get $2,000 of that money for the fall semester, followed by a second payment of $2,000 in the spring. But if you attend another term within that award year (like if you choose to take a few summer classes), you could be awarded another $2,000 to cover the additional term.
Most students don’t end up getting a year-round Pell Grant, though. For specific details on which courses and extra terms might qualify, you’d have to get in contact with your college’s financial aid office.
While the Pell Grant is designed for US citizens, you might still be eligible for a Pell Grant even if you or your parents aren’t citizens. You’ll need to check with the ED on this one to confirm your eligibility. But if you’re an undocumented student or a Deferred Action for Childhood Arrivals (DACA) student, you won’t normally qualify for a Pell Grant.
That doesn’t mean you can’t apply for a similar needs-based grant at the state level. You should still complete your FAFSA whether or not you think you’re eligible for a Pell Grant because your school and lots of state governments use the FAFSA to determine your eligibility for their own grant programs.
Although the Pell Grant sounds pretty flexible, it’s worth remembering you can’t receive Pell Grant funds from more than one college at a time.
The Federal Supplemental Educational Opportunity Grant (FSEOG) is another needs-based federal grant scheme designed specifically for undergraduate students who haven’t already got a bachelor’s degree.
Not all schools participate in the FSEOG program, so these awards are less common than Pell Grants.
But just like Pell Grants, FSEOGs are distributed by Federal Student Aid to each participating school. From there, each college disburses the relevant amount to each eligible student. This can be done by crediting your student account or giving you the money directly.
You also apply for both grants in the same way: through the FAFSA.
For the 2021/22 academic year, you could get between $100 and $4,000 per year as part of the FSEOG. The exact amount you’re going to qualify for depends on your financial need and when you apply.
Unlike the Pell Grant, financial aid you’re getting from elsewhere will impact the amount of money you’re able to get through the FSEOG program.
The Iraq and Afghanistan Service Grant program was designed to support kids of certain veterans in funding their college studies.
To be eligible for the Iraq and Afghanistan Service Grant, one of your parents (or guardians) must have been a member of the US armed forces who died after 9/11 in either Iraq or Afghanistan as a result of their military service.
This grant is specifically for students who aren’t able to meet the income requirement for the Pell Grant. In addition, you need to be under 24 years old to qualify. You must also be enrolled in college at the time of your parent or guardian’s death.
The maximum award you can get as part of the Iraq and Afghanistan Service Grant is the same as the Pell Grant. For the 2021/22 academic year, that equates to an annual maximum of $6,495.
Just like the Pell Grant and FSEOG, you can apply for the Iraq and Afghanistan Service Grant using the universal FAFSA form.
The final federal grant program that you’ll likely come across is the Teacher Education Assistance for College and Higher Education (TEACH) Grant.
TEACH Grants are financial awards designed specifically for trainee teachers — but unlike the other grant types, TEACH Grants have a few more rules attached to them.
First and foremost, to get a TEACH Grant, you need to meet certain academic requirements. That means either scoring above the 75th percentile on at least one part of a college admissions test or maintaining a cumulative grade point average (GPA) of 3.25 or above.
The TEACH Grant Program offers education students grants of up to $4,000 per year. That being said, this cap has dropped slightly in recent years thanks to the Budget Control Act of 2011 (also known as the “sequester law”).
This law dictated that TEACH Grants disbursed between October 2021 and October 2022 be reduced by 5.7% less than the maximum amount for which the student was originally eligible. Just like the other grants we’ve already covered, the exact amount you’ll qualify for depends on your academic performance, financial need, and a number of other factors.
To qualify for a TEACH Grant, you’re required to finish four years of teaching after graduating from college. That teaching can be done in an elementary school, a secondary school, or with an education agency focusing on teaching students in a low-income area.
This is what’s known as your “teaching service obligation.” As a condition of receiving your grant, your obligation must be fulfilled within eight years of graduation.
What happens if you don’t complete four years of professional teaching within eight years?
Simply put, your TEACH Grant will turn into a loan. You’ll then be expected to repay all of the money you received from your grant award with added interest.
Just like the other three types of federal grants, you can apply for the TEACH Grant program by completing and submitting a FAFSA. But before you do that, you’ll need to get in touch with your school’s financial aid office to make sure it participates in the grant program.
Be aware that different colleges and universities may require additional steps — so you may need to fill out extra forms depending on where you’re going to school.
To apply for most federal and state grants, you’ll need to complete and submit the Free Application for Federal Student Aid (FAFSA).
The FAFSA is a form used by Federal Student Aid to decide how much financial aid you’re allowed to receive. You can fill out and submit the FAFSA online — and then after your application is processed, you should get a financial aid offer which details all the grants, student loans, or other financial aid available for you.
You’re allowed to submit a FAFSA starting from October 1 of your senior year of high school. But remember that you’ve got to complete a FAFSA for every year in which you’d like to receive funding. That means you must submit an online FAFSA each year you’re in college.
So, what sort of information needs to go into your FAFSA?
Generally speaking, you’ll need to include information about how much money you’ve saved. You’ll also be expected to include detailed information about how much money your parents (or guardians) make and any outstanding debt liabilities your family may have, which could affect your ability to pay for school.
Based on the information you include in your FAFSA, the federal government will then take a look at those figures and decide how much you can realistically afford to pay for college out of pocket. Your school will then make you an offer designed to help you bridge the gap between what you can afford and what you can’t.
This offer will normally include both state grants and federal grants. But individual universities also process FAFSAs to determine your eligibility for school-specific grants.
It’s important to bear in mind that you might get asked to complete additional steps or provide extra information after submitting your FAFSA. For example, you may be asked to provide additional proof of your or your family’s income or evidence showing any outstanding debts that hinder your family’s ability to pay for your education without help.
When you accept a financial aid offer, your school’s financial aid office will normally apply it directly towards your outstanding balance for tuition, room and board, or other expenses. If you’re lucky enough to have an outstanding balance at the end of all that, the extra cash will then be transferred to you.
Although state governments often look at the FAFSA to determine your eligibility for state grants, just bear in mind that some states have their own forms. For example, in the state of Texas, you’ve got to complete the Texas Application for State Financial Aid (TASFA) if you want to receive any state-specific grants. Your individual college might have its own application forms for grants, too.
Just make sure to do your homework and ask your financial aid office. After all, those who don’t ask don’t get.
The short answer is: no. You don’t have to pay back grants for college. That’s why you should always aim to get as many grants as possible. But, as always, the long answer is a bit more complicated.
There are a few scenarios in which you’ll be expected to pay back part or all of a federal grant you’ve received. But before we dive into each scenario, don’t panic. These situations aren’t very common and won’t apply to most students.
The first situation in which you might have to repay some of your grant is if you drop out of college. If you’ve received a federal grant and you withdraw early from the course you’ve received a grant to pursue, this will effectively turn your grant into a loan.
The second situation in which you’ll have to repay a grant is if your eligibility is reduced because your enrollment status has changed. If you apply for a grant as a full-time student and then reduce your attendance to part-time, your grant entitlement will get retrospectively reduced.
That essentially means the government has overpaid you, and you’ll now need to pay back the difference.
The final situation where you might need to pay back a grant is if you haven’t met the requirements of a TEACH Grant service obligation. As we’ve already mentioned, you’ve got to teach full-time for at least four years in a school that serves low-income students after graduating.
If you can’t fulfill that obligation, your TEACH grant turns into a loan that must be repaid with interest.
If you get a grant for college that’s lower than you were hoping for, don’t panic. You’ll likely be able to appeal to your school’s financial aid office for additional support.
The first step you’ll need to take is to get in touch with the financial aid office at your college. Clearly explain your financial situation and the financial aid offer that’s been made to you. Then, ask questions about how the assessment of your ability to pay was conducted.
By listening to your school’s side of the story, you’ll often be able to identify parts of your circumstances that your school failed to take into account. Just make sure to be polite and stay calm. After all, people are more likely to help you if you’re being nice to them.
After you’ve had a chat, your school will likely have its own financial aid appeals process you’ll need to go through. This typically includes writing a formal appeal letter and submitting evidence, like proof of income or outstanding debts. If you’re a financial dependent, your parent or guardian might need to submit an appeal letter for you.
With any luck, the school will take a good look at your appeal and decide you genuinely need more help paying for your tuition. That being said, grants aren’t the be-all and end-all here.
You can also apply for one of the thousands of scholarships offered by colleges, charities, state bodies, companies, and more.
Just like grants, scholarships are free money that you won’t have to pay back. Many of them are needs-based, while others are based on your academic merit, leisure interests, background, and more.
If you need help paying for school, you should do everything you can to get a grant. After all, grants are free money that you (almost) never have to worry about paying back.
That makes grants preferable to student loans, which you could get stuck with for decades.
Fortunately, applying for a federal grant is pretty fast and straightforward thanks to the FAFSA. Just make sure that you do your homework and get in touch with your school’s financial aid office to ask about any extra steps or documentation you might need to provide in order to get your application over the line and secure your grant funding.
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