Paying for school: types of federal financial aid


There are various forms of federal financial aid. What types of aid will you get? What’s the difference between grants, scholarships, loans, and work-study? Here are the various forms of federal financial aid you may be eligible for and what they all mean.

Federal grants

Grants, like scholarships, are sometimes called gift aid because they don’t need to be repaid. Grants are usually distributed based on financial need rather than merit. After submitting the FAFSA (Free Application for Federal Student Aid), eligible students may receive the following federal grants.
  1. Federal Pell Grant: This grant is usually awarded to undergraduates only. The available amount per qualifying student changes from year to year. For the 2016-17 school year, the maximum award is $5,815. Students with demonstrated financial need can qualify for this grant.
  2. Federal Supplemental Educational Opportunity Grant (FSEOG): This grant is administered directly by your college’s financial aid office, but not all colleges participate. If eligible, you can receive awards ranging from $100 to $4,000 per year, depending on your financial need and the availability of funds at your school.
  3. Teacher Education Assistance for College and Higher Education Grant (TEACH Grant): Students who demonstrate financial need and plan to pursue a career in teaching can be awarded up to $4,000 per year.
  4. Iraq and Afghanistan Service Grant: This grant is for students who lost a parent or legal guardian in the Iraq or Afghanistan conflicts after 9/11. To be eligible, students must have been 24 or younger or enrolled in college at the time of the parent’s or guardian’s death.

Federal Work-Study

Federal Work-Study provides part-time jobs to undergraduate and graduate students, allowing them to gain career experience and earn money for college. Because these jobs are specific to each school, the availability of work-study jobs at each school differs. Students in the Federal Work-Study Program can earn at least the federal minimum wage and can work as much as their award amounts allow. Remember, even though you may qualify for a Federal Work-Study award, jobs aren’t guaranteed. Students must still search and apply for available positions.

Federal student loans

Perhaps the most well-known form of federal aid is a student loan. Unlike grants and scholarships, federal student loans are borrowed funds that must be repaid, usually with interest. Federal student loans don’t have to be paid back until after graduation, but students can begin making payments at any time. The sooner you repay your loan, the less money you will pay in interest. There are currently two types of federal student loans.
  1. Direct Loans: These can be subsidized or unsubsidized.
    • Subsidized: The government pays the interest on the loan while the student is in school. Interest begins accruing after graduation.
    • Unsubsidized: Interest begins accruing as soon as you receive your loan payment.
  2. Perkins Loan: This loan is only available for students who received it prior to Oct. 1, 2015. No new borrowers are eligible to receive a Perkins Loan.
Partial or full student loan forgiveness is offered to members of certain professions like teaching or public service, or participants in volunteer programs like the Peace Corps. It is important to fully understand each financial aid award before you accept. If you have any questions, contact your college’s financial aid office.

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