College grants are free money
Along with scholarships and loans, grants are an important way to help pay for college. Grants are usually government or private money awarded to people who demonstrate on the FAFSA that they have low income and big financial needs. Some also support people going into fields where there is high need. Like scholarships, grants are “free money” because you don’t have to pay them back.
“Unlike student loans, grants do not have to be repaid. You want as much grant money as possible,” said Ginny Dodds, manager of State Financial Aid Programs at the Minnesota Office of Higher Education.
The federal government is one of the largest providers of student grants. Two of the most common types of grants are Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOG).
The Federal Pell Grant, the largest federal grant offered, is based entirely on financial need. Every student attending college who has not yet received a bachelor’s degree yet is eligible. In the 2009-2010 school year, the grants ranged from $600 to $5,350.
The FSEOG is offered to students with the most financial need. However, unlike the Federal Pell Grant, students are not automatically eligible. The amount offered is based on financial need, the amount of funding available, and financial aid policies at individual schools. During the 2008 – 2009 school year, the grants ranged from $200 to $4,000.
Other federal grants include the Teacher Education Assistance for College and Higher Education (TEACH) Grant.
In addition to federal grants, some states provide grants. Minnesota’s state grant program, administered by the Office of Higher Education, provides need-based financial aid to Minnesota undergraduates to attend a public or private college located in Minnesota. The maximum award for 2010-2011 ranges from about $6,174 at a public two-year college to $9,059 at a private four-year college. The average award during 2008-2009 was $1,698.
James Hammar, a financial aid counselor at the University of St Thomas, explained how federal and state grants work together. “The state determines if a student is eligible for a federal Pell Grant first,” Hammar said. “The calculation for the state funds is dependent on what the student gets from the federal funds.”
The main difference between federal and state grants is how they are funded.
“Federal grants such as the Pell Grant are funded by the federal budget, while the Minnesota State Grant is funded by taxpayer revenue in the state,” Dodds said. “It is only awarded to Minnesota residents going to a college in Minnesota, so if a student is going to the University of Wisconsin-Eau Claire, for example, they can’t use it.”
Another difference is that for state grants, the cost of the college is considered, while it has no effect on the size of Pell Grants.
“The Pell Grant will give you the same amount no matter what college you’re going to,” Dodds explained. “But for state grants, if you’re going to a private school, which usually costs more, you’ll get more money than if you’re going to a community college. So sometimes students in a higher income range who aren’t qualified for a Pell Grant but are attending a more expensive school can receive state grants.”
Some colleges and organizations also offer grants.
“Some schools also have grant programs,” Hammar said. “Schools can award them in addition to scholarships. It’s just that a student needs to have demonstrated financial need in order to receive a grant. Generally anything that is coming from an outside source is called a scholarship, but it just depends on what it’s being awarded on. If it’s awarded based on need, then it would be considered a grant.”
To apply for federal grants, all you need to do is fill out the Free Application for Federal Student Aid, or FAFSA. (See Mariah’s story to learn how to fill out the FAFSA.) To qualify for maximum aid, complete it as soon after Jan. 1 each year as possible.
“You should be automatically considered as long as you’re talking about a federal or state grant or a grant from your school,” Hammar said. “Schools can have separate financial aid applications that they have you fill out. But since grants are awarded on the basis of financial need, all students generally have to do is fill out the FAFSA. As long as they complete the FAFSA each year, then they’ll automatically be considered for federal and state grants.”