A newer version of your browser is available. Older versions may limit your ability to access some of this site's functionality. Citizens Bank recommends upgrading your browser.

Learn More

Download the newest version of Microsoft Internet Explorer

Clear Search

3 Types of Federal Financial Aid to Help You Pay for College

Key Takeaways

  • Federal grants don’t have to be repaid and are distributed based on financial need.
  • Work-study allows you to earn money for college while also gaining valuable career experience.
  • Federal loans are borrowed from the federal government and must be repaid, usually with interest.

For many people, federal financial aid is critical in order to afford the cost of college. It can come in different forms — some don’t have to be repaid (free money), others do.

Here’s a rundown of the federal financial aid that you could qualify for.

1. Federal grants

Grants, like scholarships, are sometimes called gift aid because they don’t need to be repaid. Grants are usually distributed based on financial need rather than merit.

After submitting the Free Application for Federal Student Aid (FAFSA), students who demonstrate financial need may receive the following federal grants:

  • Federal Pell Grant: This grant is usually awarded to undergraduates only. The amount available to any qualifying student changes from year to year. For the 2018-19 school year, the maximum award is $6,095. You could qualify for this grant if you demonstrate enough financial need. 
  • Federal Supplemental Educational Opportunity Grant (FSEOG): This grant is administered directly by your college’s financial aid office, but not all colleges participate. If eligible, you can receive awards ranging from $100 to $4,000 per year, depending on your financial need and the availability of funds at your school.
  • Teacher Education Assistance for College and Higher Education Grant (TEACH Grant): Students who demonstrate financial need and plan to pursue a career in teaching can be awarded up to $3,752 per year.

2. Federal work-study

The Federal Work-Study Program provides part-time jobs to undergraduate and graduate students. These jobs allow students to gain career experience and earn money for college. These jobs are specific to each school, so availability of work-study jobs differs from one college to the next. Students in the program will earn at least the federal minimum wage, and can work as much as their award amounts allow.

Jobs in the program could be on campus or off campus. However, even if you qualify for a work-study award, jobs aren’t guaranteed. You must still search and apply for available positions.

Undergrad students are paid hourly; grad students, either hourly or by salary. You’ll receive payment from the school at least once a month; you’ll receive payment directly, unless you request the funds to go directly to your bank account or back to the school to cover education expenses.

Work-study isn’t technically free money; you’re earning it by working. Still, it provides another source of funding for school, just like grants.

3. Undergraduate federal student loans

Grants and work-study don’t require reimbursement. Federal student loans, on the other hand, are borrowed from the federal government and must be repaid, usually with interest. All federal undergraduate loans have the same fixed rate, determined by Congress.

These loans don’t have to be paid back until after graduation, but students can begin making payments at any time, even if they’re interest-only payments. The sooner you repay your loan, the less money you will pay in interest.

New undergrad students can apply for loans through the Federal Direct Loan Program. The program includes:

  • Direct Loans: These are loans for undergrad and grad students. They can be subsidized or unsubsidized if you’re an undergrad student. Subsidized means the government pays the interest on your loan while you’re in college and up until deferment ends, while unsubsidized loans require you to pay all accrued interest. All loans for grad students are unsubsidized.
  • Direct PLUS Loans: These are available for parents taking out loans for their kids, as well as grad students and those pursuing other professional degrees. Direct PLUS Loans are always unsubsidized.

Note: Subsidized loans are based on financial need.

Federal loans also offer special benefits when it comes time to repay, including income-based repayment, loan forgiveness, military benefits, and others.

What to remember

Paying for college can feel like a puzzle at times, and an intimidating one at that. But the best way to be prepared for covering the cost is to know all of your options. Federal financial aid is just one piece; depending on your financial need, it could be the most crucial one of all.

More information

We are committed to helping you reach your potential. If you have questions, or would like more information about how to pay for college, please call 1-888-411-0266 to speak to a Student Lending Specialist, visit us online, or stop by your nearest Citizens Bank branch.

Not seeing what you're looking for?

#Json=Label_Lookup|Brand=citizensbank|ApplyToParentElement=|TargetElementType=|TargetElementId=|Key=Personalize your experience.#

May We Suggest

New to Citizens Bank? Here are some of our most requested products and most popular areas of interest.