Types of Available Government Grants and Loans

Types of Available Government Grants and Loans


Most individuals who would like to resume their education do not realize that they qualify for government financial assistance in the form of grants and loans because of their age. In actuality, government assistance for higher education does not depend on age, but rather on demonstrated financial need as reflected on an individual’s submitted FAFSA form. Numerous types of U.S. grants and loans exist that enable individuals to study full time without having to work outside of school, and most government assistance for education can be applied towards online education programs as well. Below outlines the different types of government grants and loans along with their eligibility requirements.

Government Grants

Government grants for education are issued by the U.S. government, and do not need to be repaid upon graduation. Typically, government grants, including state grants, are issued either on the basis of financial need or on the basis of academic merit. Regardless of under which basis an individual is applying to receive a grant, they will be required to fill out and submit a government FAFSA form.

Federal Pell Grant

The Federal Pell Grant is the most common type of grant that the U.S. Government issues in order to fund individuals’ higher education endeavors. In order to receive a Federal Pell Grant, students are required to demonstrate financial need as reflected on their FAFSA forms. Generally, eligibility for the Federal Pell Grant is dependent upon numerous factors, including expected family contribution, number of family members, number of dependent family members attending college, family assets, whether an individual is enrolled in college full or part time, and the cost of attending the targeted universities.

Other qualifications – aside from demonstrated financial need – in order to be eligible for the Federal Pell Grant include:

  • Individuals must be U.S. Citizens
  • Individuals must have a high school diploma or GED
  • Individuals must show satisfactory academic progress

Once students receive approval to receive a Federal Pell Grant, their university will deposit the funds into a designated account at least once per semester, quarter or trimester.

Federal Supplemental Education Grant (FSEOG)

Eligibility for the Federal Supplemental Education Grant, much like eligibility for the Federal Pell Grant, is determined by individuals’ demonstrated financial need. Unlike the Federal Pell Grant, however, the FSEOG is only supplemental, meaning that individuals will also need to seek out other forms of financial aid in order to cover their tuition expenses.

In order to receive the Federal Supplemental Education Grant, individuals’ expected family contribution on their FAFSA reports must be zero – thus, only those who demonstrate exceptional financial need may receive the FSEO Grant. Other eligibility requirements include:

  • Individuals must be undergraduate students pursuing a Bachelor’s degree
  • Individuals must be U.S. Citizens or qualifying non-U.S. Citizens
  • Individuals must have a minimum of 2.0 GPA
  • Individuals have never defaulted on a student loan and/or do not owe money on government loans.

The Academic Competitiveness Grant

The Academic Competitiveness Grant, unlike the Federal Pell Grant or the FSEO Grant, is primarily based on academic merit. That being said, however, applicants must also qualify for the Federal Pell Grant in order to even be considered for this type of grant. The Academic Competitiveness Grant is only issued to students who are able to demonstrate completion of a rigorous high school program of study before enrolling in college. Other required qualifications include:

  • Individuals must be enrolled at least part time in a degree-granting institution
  • Individuals must have completed a high school program on or after January 2005
  • Individuals must be U.S. Citizens or qualified non-U.S. Citizens

Students who qualify will receive up to $750 their freshman year of college, and $1,300 thereafter as long as they maintain a 3.0 GPA.

Government Loans

Unlike government grants, which do not have to be repaid upon graduation, students are required to start paying back any issued government loans starting six months after graduation. Generally, private organizations, such as Sallie Mae, supply students with government student loans at low interest rates under regulation of the U.S. Department of Education through the Federal Family Education Loan Program and the Federal Direct Student Loan Program.

Federal Family Education Loan Program (FFEL) and the Federal Direct Student Loan Program

Both the Federal Family Education Loan and the Federal Direct Student Loan Programs offer university students the opportunity to take out different types of low interest lows in order to cover their educational expenses. The types of loans include:

  • Stafford Loans

    The first type of federal subsidized loan, Stafford loans, is eligible to students enrolled in an accredited institution of higher education and who demonstrate adequate financial need. In order to apply for a Stafford loan, individuals must first complete and submit a FAFSA form.

    If students quality for Stafford loans, they will either receive an unsubsidized loan or a subsidized one. With the latter, the U.S. government pays all interest accrued on the student loan until graduation and the designated grace period directly following graduation. With unsubsidized loans, however, students are responsible for paying the loan interest accrued while they are attending college. As of July 1, 2006, the interest rate for Stafford loans is 6.8%.

  • Federal PLUS Loans

    The second type of federal loan, PLUS loans, is designated for parents to help cover the costs of attending university. Unlike Stafford loans, parents are not required to demonstrate financial need in order to be permitted to sign up for a federal PLUS loan. Interest rates are relatively low – 8.5% as of July 1, 2006.

    In order to receive a federal PLUS loan, parents must complete a Direct PLUS Loan application and sign a promissory note. Parents must also be able to pass a credit check. All the materials can be found at their universities’ financial aid office.

  • Federal Consolidation Loans

    Federal consolidation loans combine multiple federal education loans into one single loan, which is then used to pay off balances on other loans. The interest rate of a federal consolidation loan is determined by the weighted average of the interest rates on the loans being consolidated with a cap at 8.25%. Students are only able to consolidate their loans during their repayment grace period or after loans enter repayment.


The U.S. Government offers individuals multiple financing options in order to resume their education. Generally, those individuals demonstrating adequate financial need are able to receive federal grants, which do not need to be repaid. Prospective students should also keep in mind that the individual states, in which they reside, also offer educational assistance. To find out whether their state offers financial need or merit based grants, individuals should visit their state’s Department of Education website. 

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