A guide to types of federal financial aid for college students

For many people, federal financial aid is critical in order to afford the cost of college. Federal financial aid can come in many different forms, such as grants, work-study, scholarships and loans. Read on to learn about these different types of financial aid, how they work and where to find them.

What is financial aid and how to apply for it

Financial aid is money to help pay for college or career school. Grants, work-study, loans and scholarships help make college or career school affordable. Financial aid typically can be used to cover a variety of school-related expenses that include housing, tuition, fees, books and supplies.

The process for applying for financial aid for many students starts with the Free Application for Federal Student Aid (FAFSA). The FAFSA is available online, and the deadline can vary depending on the school and the state the school resides in. Deadlines can be viewed on the FAFSA Application Deadlines page.

When completing the FAFSA, it's important to apply as early as possible and to apply every year of college. For more tips on completing the FAFSA, check out tips to make completing your FAFSA easier.

What types of financial aid are available?

As previously mentioned, there are a variety of different types of financial aid available. Here are some of the most common.

1. Federal grants

Grants, like scholarships, are sometimes called gift aid because they generally don't need to be repaid (except under certain circumstances). Grants are usually distributed based on financial need rather than merit.

After submitting the FAFSA, students may be eligible to receive the following federal grants:

• Federal Pell Grant: This need-based grant is usually awarded to undergraduates only. The amount available to any qualifying student changes from year to year. It also depends on a variety of factors such your FAFSA information, cost of attendance and student enrollment status.

  Beginning with the 2024-2025 award year, the Special Rule for Federal Pell Grants has replaced the Iraq and Afghanistan Service Grant (IASG) and Children of Fallen Heroes (CFH) grant. You may be eligible for the Pell Grant if your parent or guardian died as a result of military service in Iraq or Afghanistan and you meet other criteria.

• 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, there are a range of awards available depending on your financial need and the availability of funds at your school.
• Teacher Education Assistance for College and Higher Education (TEACH) Grant: Students who plan to pursue a career in teaching in a high-need field may be eligible for this grant. This grant is different than the others in that you'll have to agree to complete a teaching service obligation to receive it. If you don't fulfill the teaching requirement, the TEACH grant is converted to a loan.

2. Federal work-study

The Federal Work-Study Program provides part-time jobs to undergraduate and graduate students with financial need to help earn money for college expenses.

Even if you're eligible for the Federal Work-Study Program, job offerings are specific to each school and aren't necessarily guaranteed — you'll need to search and apply for any available positions.

• You can earn at least the federal minimum wage and there's potential to earn more based on the position and work-study award.
• You can work as much as your award amount allows.
• You may find a job that's on- or off-campus.
• Undergraduates are likely to be paid hourly, though graduate students may receive a salary.
• You'll be paid at least once a month.
• You may be paid directly by the employer unless you ask for the money to go toward your college expenses.

For more information on work-study, see this Student Aid resource.

3. Federal student loans

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

These loans usually don't have to be paid back until after graduation, but students can begin making interest-only payments while in school. The sooner you repay your loan, the less money you will pay in interest.

To apply for a federal student loan, you’ll need to complete and submit the FAFSA. Colleges can then send you a financial aid offer, which may include federal student loans such as:

• Federal Direct Loans: There are two types of loans for undergraduate students: Federal Direct Subsidized and Federal Direct Unsubsidized. You may be able to qualify for one or both of these types of federal loans.

  The difference between the subsidized and unsubsidized loan is that the government is paying the interest on the subsidized loan while you're in school (at least half-time enrollment) and during the first six months after you leave school (known as a grace period). Federal Direct Subsidized Loans are only available to students with financial need, so not all students qualify for them.

  For Federal Direct Unsubsidized Loans, financial need is not a requirement, but you're responsible for the interest throughout the entire life of the loan. For graduate students, federal loans will always be unsubsidized.

• Federal Direct PLUS Loans: These loans are available to eligible parents with students attending college, graduate students and professional students. Direct PLUS Loans are always unsubsidized.

Federal loans may offer special benefits when it comes time for repayment, including income-based repayment, loan forgiveness, military benefits and more.

4. Scholarships

In addition to federal and state governments and agencies, individual organizations and schools offer a variety of scholarships. These can be based on merit, financial need or other criteria. Some of the most well-known scholarships include academic and athletic scholarships.

Some organizations and schools may require FAFSA completion as part of their scholarship application process. Even though you usually apply to scholarships separately, completing the FAFSA could open the door to additional opportunities.

For help finding scholarships, one tool to consider is the Scholarship Search tool from the Citizens college planning platform, College Raptor®. This free tool allows you to see scholarship options from different institutions, private businesses, and even federal and state governments.

Scholarships are available in more places than you probably think. Did you know we even award them at Citizens? You could enter to win our annual $15,000 scholarship towards school certified expenses.* No purchase necessary. You can learn more here.

5. Other types of financial aid

Financial aid can also come from other sources. Families may consider looking at:

• State government grants and aid
• Aid programs for military families
• Benefits for international students
• Donors from the community
• Private student loans
• Employer tuition reimbursement

Understanding all your financial aid options

Paying for college can feel like a puzzle at times — and an intimidating one at that. But the best way to prepare for covering the cost is to understand what's available to you. The different types of financial aid listed may not be an all-inclusive list, but it does provide options.

Federal financial aid is just one piece. Depending on your financial need, however, it could be a most crucial one. Remember to complete the FAFSA each year of college and to apply for scholarships throughout college, not just freshman year.

Citizens is here to help you navigate your student lending options for today and the future. Learn more about your options on our student lending page.