Tap into Federal and State Grants to Pay for College

Posted on Thursday, September 10th, 2009 at 5:23 pm in Financial Planning

Federal and state grants are the largest sources of direct aid for students. The great advantage of grants, as opposed to student loans, is that you don’t have to pay them back – basically, they’re free money. With the cost of higher education going up every year, you should find out as soon as possible whether you can qualify for a federal or state grant.

Student grants are normally distributed on a needs basis. In most cases there is only a certain amount available per year, so you have to apply early to avoid missing out even if you qualify. There are four major types of grants available to students:

Federal Pell grants: This is the largest grant program by a long way. Pell grants range from a few hundred to many thousands of dollars, and are awarded to needy students according to each college’s criteria. Every college in the program gets a predetermined sum of Pell money every year and gives out grants until the funds are depleted.

If you’re getting a Pell grant and are a math, science or social science major, you can also apply for an Academic Competitiveness Grant. If accepted, you’ll receive up to $750 in the first year of your academic program and $1,300 in the second year. For math and science majors, there’s also the National SMART Grant, which can be worth up to $4,000 a year in the third and fourth years of your course.

Federal Supplemental Education Opportunity grants: Students in extreme financial hardship can apply for these grants through their colleges’ financial aid offices. Awards range from $100 to $4,000.

State grants: Each state has its own aid programs for university-level students. While these are usually based on income, there are some that are set up to promote study in specific fields. For example, education students in California get a break of up to $19,000 on their loans if they agree to work in a low-income area and teach subjects that are short of teachers. In Ohio, meanwhile, grants are only available to you if your family’s income is below $75,000.

Take a look at the website for your state’s student aid or higher education commission to see what kind of grants and other financial aid might be available to you. You can usually apply for aid via these sites too.

Institutional grants: These are funded by the schools themselves, and are given to certain students to top up the federal and state money they receive. In other instances, colleges use institutional grants to attract specific students who would bring particular qualities to the school, for example outstanding academic or sporting achievements.

You don’t normally need to apply for these grants. However, if your skills or academic record are likely to be attractive to certain colleges, you could try to snag a nice financial aid package by applying there rather than competing to be accepted by schools that don’t really need what you have to offer.