Student Grants

Student Grants are an important source of college funding and the best thing about grants is that they don't ever have to be paid back. We are not talking about grant programs to conduct research. Here we are focusing on federal grant programs that help students pay for the cost of their education.

Types of Student Grants

There are basically two types of federal student grant programs that we will discuss in more detail shortly. The first is Pell Grants, which are awarded based on financial need. The second is the Federal Supplemental Opportunity Grants (FSEOG), which are awarded to students demonstrating exceptional need.

Qualifying for Student Grants

Additional Resources

To qualify for student grants, you need to fill out a Free Application for Student Aid (FAFSA). Once the application has been reviewed, you will get a Student Aid Report (SAR) which will outline your Expected Family Contribution or EFC.

Congress has established a formula to determine who is eligible for student grants. The formula used to determine grant eligibility considers cost of attendance at a particular college or university, and the student's status as a ful- time or part-time student.

Federal Pell Grants

In general, Federal Pell Grants are awarded only to undergraduate students. There are exceptions and some graduate students enrolled in a teacher certificate program may also be eligible. The 2007 / 2008 maximum grant under the Pell program is $4,310.

Pell Grants are paid out by your college or university at least once per term. The grant can be paid a student account, directly to the student, or using a combination of these methods. The school must notify the student in writing about the process and this letter will include how much the student is being paid, where the money will be deposited and how frequently those deposits will be made.

Federal Supplemental Educational Opportunity Grants

Federal Supplemental Educational Opportunity Grants, or FSEOG, is a program reserved for students demonstrating exceptional financial need. Once again, this grant is targeted to undergraduate students and eligibility is determined by ranking the lowest EFC. Priority is also given first to those students that are already eligible for Pell Grants. Like all grant programs, this money does not have to be paid back.

Grant Funding

There is one slight twist concerning the funding of FSEOGs. Each school will receive from the federal government enough money to pay for the all of their student's Pell Grants. That is to say, that all Pell Grants will be paid to students. Students that qualify for FSEOGs might not actually receive these grants. Students are awarded these grants based on the funding level at the school. That is how the priority is used; those students with the lowest EFC will get these grants first, until the funding is depleted.

The exact amount of these grants will vary between $100 and $4,000, depending on when the student applies, demonstrated need, and funding levels. Policies may also vary from school to school, so students need to check with their financial aid office. As was the situation with Pell Grants, money is dispersed to student directly to a school account, the student's bank account or a combination of these methods. These grants are paid to each student at least once per term.

Other Types of Federal Grants

At the beginning of this article we discussed student grants versus other types of federal grants. To qualify for a grant, the recipient must first apply for the award directly with the federal agency responsible for administering the grant program. That agency then determines if the award will be granted, and how large the grant will be.

When receiving a grant, the recipient usually agrees to certain terms and conditions. This may also include regulations of the program itself or the federal agency. Failure to follow the terms and conditions of the grant can result in loss of the grant and even fines.

In general there are five different types of grants:

Project Grants

A project grant is awarded, or granted, on a competitive basis. That is, there are many potential recipients competing for project grants. Most of these grants involve the scientific research, social services, the arts, advanced technologies, and higher education. Pell and FFEOG grants are considered project grants.

Formula Grants

A formula grant provides funding that is based on a law. Examples of formula grants include the Work Incentive Program, the Job Training Partnership Act. Formula grants can also be broken down further into two subcategories - categorical grants and block grants.

Categorical Grants

A categorical grant can only be spent for a narrowly defined reason. Recipients of categorical grants are usually asked to match a portion of the grant provided. Most of the categorical grants in existence today are also considered formula grants. Examples of this type of grant include Urban Forestry Assistance and the Head Start program.

Block Grants

Block grants are generally less restrictive in terms of how the money is used relative to categorical grants. This flexibility is demonstrated by the programs benefiting from this type of federal grant. Typical programs include drug and alcohol abuse, community efforts, and mental health services.

Earmark Grants

Earmark grants are federal grants that have been singled out by appropriations of the US Congress. Perhaps the most controversial of all grant programs, the process itself is open to abuse by lobbyist and politicians alike. In 2006, earmark grants accounted for nearly $64 billion in federal spending.

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