Grant-Based Financial Aid


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Attending college is a major life event. Tuition, fees, and room and board at a public four-year college or university in the 2019-20 academic year averages about $21,950 per year for an in-state student, according to the College Board.

Several investment vehicles with tax advantages exist to help save for college. However, most college-bound students and their parents rely, in part, on financial aid to help pay for college. Federally funded financial aid comes in several forms, including grants, loans, and work-study programs. It can also include part-time military service during and after college. This educator aims to familiarize you with the major types of federal financial aid and scholarships to help pay for college.

Let's first take a look at grants. A grant is a gift. It does not require repayment. The two main types of federally funded grants are Pell grants and Federal Supplemental Educational Opportunity Grants (FSEOGs):

  • Pell grants.Pell grants are available to students, mostly undergraduates, who demonstrate financial need. Financial need is based on a formula that subtracts the expected family contribution (EFC) from the cost of attending college. The maximum annual Pell grant award for 2019-20 is $6,195.

    If enrolled on less than a half-time basis, a student may still be eligible to receive a Pell grant, albeit a lesser amount. The U.S. Department of Education (DOE) disburses Pell grants directly to the recipient's school. The school must notify the student when a Pell grant has been received on the student's behalf.

    You must reapply for a Pell grant each year. You can use an abbreviated form to reapply if you applied in the previous year. You also cannot receive more than one Pell grant in a year. The school must pay the student at least once each school term and notify the student how it will disburse funds.

  • Federal Supplemental Educational Opportunity Grants.FSEOGs are campus-based aid. As such, the college or university is responsible for disbursing the award and has final say over how much is actually awarded. Amounts disbursed to a recipient of an FSEOG may not be the same amount awarded by the program.

    Like Pell grants, FSEOGs are intended as financial aid for the neediest college students, mostly undergraduates and go to recipients of Pell grants. To be eligible for an FSEOG, an applicant must demonstrate financial need by completing a financial-aid application. The current annual maximum amount for an FSEOG is $4,000.

To apply for federal financial aid, complete a Free Application for Federal Student Aid (FAFSA). You can submit a FAFSA as early as January 1, 2019 for the 2020-21 academic year, which usually begins in August or September. The DOE urges you to complete a FAFSA if you are also seeking financial aid from non-federal sources since these sources use the FAFSA.

The DOE deadline for receiving a FAFSA for the upcoming academic year is June 30, 2021. Keep in mind that the deadlines for FSEOGs and other forms of campus-based aid may be different.

In addition to these federal grant-based financial aid programs, you may wish to look for grants from state government sources. Visit the Web site of the Department of Education to find a list of higher-education state agencies. You may also wish to contact charitable organizations, associations, foundations, and corporations for case-by-case availability of financial-aid programs. Many of these organizations sponsor scholarship funds, which we take a look at next.

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