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Your ultimate guide to federal student aid
Find out if you qualify, award amounts and how to apply.
With the cost of college nearing $75,000 at many private universities around the country, now more than ever it’s vital to explore all of your financial aid options. Fortunately, the federal government offers several different grants and student loans, as well as a work-study program to help offset the cost of going to school.
While you need to demonstrate financial need for many of the options listed on this page, there are some types of aid that are open to all students. Because of this, we recommend completing the Free Application for Federal Student Aid (FAFSA) even if you’re not sure whether you’ll qualify.
Types of federal student grants
When looking to pay for school, grants are one of the first options you should turn to since the funds don’t need to be repaid. The federal government offers several options, though eligibility requirements vary by program.
Federal Pell Grant
- Award amount: $623 to $6,195 for the 2019-2020 academic year
- Eligibility requirements:
- Undergraduate student
- Demonstrate significant financial need as determined by the FAFSA
- No previously earned bachelor’s, graduate or professional degree
- US citizen or eligible noncitizen
- Meet other federal aid requirements
Of all the federal student grants available, the Federal Pell Grant is the most common. How much you qualify for depends on your financial need and whether you’re enrolled full time or part time — among other factors.
The ins and outs of the Federal Pell Grant
Federal Supplemental Educational Opportunity Grant
- Award amount: $100 to $4,000 per year
- Eligibility requirements:
- Undergraduate student enrolled in an eligible school
- Demonstrate exceptional financial need as determined by the FAFSA
- No previously earned bachelor’s, graduate or professional degree
- US citizen or eligible noncitizen
- Meet other federal aid requirements
Like the Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG) is reserved for students who show exceptional financial need. How much you qualify for depends on how soon you submit the FAFSA, how much other aid you receive, your financial need and the availability of funds at your school.
Teacher Education Assistance for College and Higher Education Grant
- Award Amount: Up to $4,000 per year
- Eligibility requirements:
- Complete the FAFSA — you don’t need to show financial need
- Enrolled as an undergraduate or graduate student in a TEACH Grant-eligible program at a participating school
- Meet specific academic achievement criteria, which vary by program
- Complete counseling that explains the conditions of the TEACH Grant service
- Sign a TEACH Grant Agreement to Serve
- US citizen or eligible noncitizen
- Meet other federal aid requirements
You could qualify for the Teacher Education Assistance for College and Higher Education (TEACH) Grant if you’re planning on becoming a teacher at a low-income school or in a high-needs field — such as math or science. Keep in mind the grant funds you receive will convert to an unsubsidized loan if you don’t fulfill the teaching requirements listed in your TEACH Grant Agreement to Serve. You must provide proof that you’re meeting the teaching requirements each year — until your service agreement expires.
Iraq and Afghanistan Service Grant
- Award amount: $6,195 for the 2019-2020 academic year
- Eligibility requirements:
- Undergraduate student
- Display financial need as determined by the FAFSA
- No previously earned bachelor’s, graduate or professional degree
- Not eligible for the Federal Pell Grant based on need
- Parent or guardian was a member of the US armed forces and died as a result of military service performed in Iraq or Afghanistan after the events of 9/11
- You were under 24 years old or enrolled in college at least part time at the time of your parent’s or guardian’s death
- US citizen or eligible noncitizen
- Meet other federal aid requirements
The Iraq and Afghanistan Service Grant was created for students who lost a parent in military service performed in Iraq or Afghanistan after 9/11. However, you can only qualify if you’re not eligible for the Federal Pell Grant based on need.
Types of federal student loans
If you’re unable to cover all of your college expenses through grants, you may need to consider loans. We recommend looking into your federal loan options before turning to private lenders since interest rates are typically lower and repayment plans are more flexible.
Direct Subsidized Loans
- Loan amount:
- First-year limit: $3,500
- Second-year limit: $4,500
- Third-year and beyond limit: $5,500
- Interest rate: 2.75%
- Origination fee: 1.059%
- Eligibility requirements:
- Undergraduate student enrolled at least half time at a participating school in a program that leads to a degree or certificate
- Show financial need as determined by the FAFSA
- In good financial standing for any previous federal loans
- Meet other federal aid requirements
Of all the federal loan options, Direct Subsidized Loans are ideal since interest doesn’t accrue while you’re an active student. However, they’re only available to undergraduate students who demonstrate financial need. Unlike private student loans, your credit score and income aren’t taken into consideration.
Take a deeper dive into Direct Subsidized Loans
Direct Unsubsidized Loans
- Loan amount:
- First-year limit:
- Dependent student: $5,500
- Independent student: $9,500
- Second-year limit:
- Dependent student: $6,500
- Independent student: $10,500
- Third-year and beyond limit:
- Dependent student: $7,500
- Independent student: $12,500
- First-year limit:
- Interest rate:
- Undergraduate student: 2.75%
- Graduate student: 4.3%
- Origination fee: 1.059%
- Eligibility requirements:
- Enrolled at least half time at a school that participates in the Direct Loan Program
- In good financial standing for any previous federal loans
- Meet other federal aid requirements
Direct Unsubsidized Loans are easier to qualify for since you don’t have to show financial need. They’re open to both graduate and undergraduate students, though how much you’re eligible for depends on whether you’re an independent or dependent student and your year in school. Unlike subsidized loans, interest accrues while you’re in school — making your loan more expensive in the long run.
The ins and outs of Direct Unsubsidized Loans
Direct PLUS Loans
- Loan amount: Up to 100% of the school-certified cost of attendance
- Interest rate: 5.3%
- Origination fee: 4.236%
- Eligibility requirements:
- Parent PLUS Loan
- Biological, adoptive parent or stepparent of a dependent undergraduate
- Student must be enrolled at least half-time at an eligible school
- Meet credit and income requirements
- In good financial standing for any previous federal loans
- US citizen or eligible noncitizen
- Meet other federal aid requirements
- Graduate PLUS Loan
- Graduate or professional student enrolled at least half time at an eligible school
- Enrolled in a program that leads to a graduate or professional degree or certificate
- Meet credit and income requirements
- In good financial standing for any previous federal loans
- US citizen or eligible noncitizen
- Meet other federal aid requirements
- Parent PLUS Loan
PLUS loans can be a useful resource for filling gaps in funding after you’ve exhausted your free aid and other federal loan options. Parent PLUS Loans can be taken out by a parent on behalf of their dependent child.
Graduate PLUS Loans are reserved for graduate and professional students. Both types of PLUS loans require you to meet credit requirements — or apply with a creditworthy cosigner.
The ins and outs of Direct Unsubsidized Loans
How do repayments work with federal student loans?
Federal student loans have more flexible repayment options than private loans. You can hold off on making repayments until six months after you graduate or otherwise drop below half-time enrollment. From there, you’ll be automatically enrolled in the Standard Repayment Plan — which comes with full principal and interest repayments evenly divided over 10 years.
However, if that plan doesn’t work for you, you have seven other repayment plans to consider — including those based on your income — with terms up to 25 years. What plans you qualify for depend on the type of federal loans you have, when you took out the loans and your income. You can compare all of the options available to you with our guide to student loan repayment plans.
Federal Work-Study Program
- Award amount: Varies
- Eligibility requirements:
- Undergraduate or graduate student at an eligible school that participates in the Federal Work-Study Program
- Demonstrate financial need as determined by the FAFSA
- US citizen or eligible nonresident
- Meet other federal aid requirements
The Federal Work-Study Program provides part-time employment on or off campus for undergraduate, graduate and professional students who demonstrate financial need. All work-study jobs will pay at least the federal minimum wage, though it might be higher depending on the type of work you’re doing.
How much you qualify for varies by financial need, when you submit the FAFSA and your school’s funding level. However, the average award amount for the 2019 academic year was $1,808, according to Sallie Mae’s report on How America Pays for College.
Take a deeper dive into the Federal Work-Study Program
How do I apply for federal student aid?
To apply for all types of federal student aid, you need to submit the FAFSA. While deadlines vary by school, we recommend submitting it as soon as you can after applications open on October 1st each year. This is because many types of federal aid are offered on a first-come, first-served basis.
Check out our step-by-step guide to filling out the FAFSA to get started.
Other types of financial aid
If you’ve exhausted all of your federal aid options and still have gaps in funding, consider one of these options:
- Private student loans. While these tend to come with higher maximum loan amounts than federal loans, interest rates are typically higher unless you have good to excellent credit or a creditworthy cosigner. Private student loans also come with less-flexible repayment plans and fewer forbearance and deferment options.
- Grants. Look into grants offered through your school, state government or private organizations. Like with federal grants, you typically need to demonstrate financial need to qualify and don’t have to repay the funds. You can start your search with our guide to college grants.
- Scholarships. We recommend applying for as many scholarships as possible since they also don’t have to be repaid. Unlike grants, these typically are based on academic achievement and talent as opposed to financial need. Check out our A-to-Z list of scholarships to get started.
- Employer tuition assistance. More and more employers have started offering some form of tuition assistance, including companies like Walmart, Chipotle and Starbucks. Ask your HR department if there are any options available and how to apply.
- Income share agreements. Offered by some schools and private companies, this alternative to student loans allows you to borrow funds and pay them back with a percentage of your monthly income for a few years after you graduate. You can learn more with our guide to income share agreements.
Compare private student loan providers
Bottom line
The US Department of Education offers a slew of financial aid options to help offset the cost of getting your degree. Some are open to all students who meet general federal aid requirements, while others are only available to students who can demonstrate financial need. Regardless, filling out the FAFSA as soon as you can will help ensure you receive the most aid available to you.
Need more funds? Check out our guide to student loans to compare lenders and learn more about how they work.
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