Federal financial aid comes from the U.S. government, and depending on your financial need can include grants, work-study and loans that can help you better afford college. To qualify, you need to complete the Free Application for Federal Student Aid (FAFSA). In this guide, we walk you through the various types of federal financial aid, plus cover a few other sources of college funding you should know about.
What is financial aid?
Financial aid, such as state and federal grants, work-study, loans, and private and institutional scholarships, is money to help pay for college or career school, making it more affordable. Depending on the source, you can use financial aid to pay for a variety of school-related expenses that include housing, tuition, fees, books and supplies.
What is federal financial aid?
Federal financial aid comes directly from the federal government and includes federal student loans, grants (like the Pell Grant) and work-study.
How do you apply for federal financial aid?
To apply for any type of federal financial aid for college, you'll need to complete the FAFSA.
The application opens on October 1 for the following academic year. Complete your FAFSA as soon as you can to maximize your potential financial aid package. It's first come, first serve, and money can run out. Many colleges and state programs also have early deadlines for financial aid.
For more tips on completing the FAFSA, check out tips to make completing your FAFSA easier.
Types of federal financial aid for college students
Federal financial aid can come in the form of grants, loans and work-study.
1. Federal grants
Grants are considered a type of "gift aid," as they generally don't need to be repaid (except under certain circumstances). There are three federal grants available:
- Federal Pell Grant: The Pell Grant is for students who demonstrate financial need. Undergraduate students could receive up to $7,395 for the 2026–27 award year depending on their Student Aid Index (SAI), cost of attendance and enrollment status.
- Federal Supplemental Educational Opportunity Grant (FSEOG): Undergraduates with exceptional financial need could receive up to $4,000 through the FSEOG. Not all schools participate in this program.
- Teacher Education Assistance for College and Higher Education (TEACH) Grant: Students who are pursuing a teaching career in a high-need field may be eligible for the TEACH Grant, but they must agree to complete a service obligation after graduation. If you don't fulfill the requirement, the grant is converted into a loan. It awards up to $4,000.
2. Federal student loans
Federal student loans are borrowed from the U.S. government and must be repaid, though there are forgiveness programs available. You can defer payments until six months after your graduation, drop below half-time or leave school.
Types of federal loans include:
- Federal Direct Subsidized Loans: The government pays for interest on subsidized loans while the student is in school and during the six months after the student graduates or leaves college. With a 6.52% interest rate for the 2026-2027 school year, they're only available to undergraduates with demonstrated financial need.
- Federal Direct Unsubsidized Loans: Interest begins accumulating immediately on unsubsidized loans and the student is responsible for the interest. Undergraduate, graduate and professional students are eligible.
- Federal Direct Parent PLUS Loans: PLUS loans are available to parents of students. It requires a separate application in addition to the FAFSA, and the parent is responsible for paying back the money. They have a 9.07% fixed interest rate. The Direct GradPLUS Loan program for graduate students is ending on July 1, 2026.
Federal loans may offer special benefits when it comes time for repayment, including income-based repayment, loan forgiveness, military benefits and more.
3. Federal work-study
The federal work-study program provides part-time jobs to undergraduate and graduate students with financial need to help them earn money for college expenses. Job offerings are specific to each school and aren't necessarily guaranteed, even if you're accepted to the program. Spots are limited, and you need to apply for any available positions.
Some quick facts about work-study:
- 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.
- There are typically jobs available on campus or off-campus through college partners.
- Undergraduates are likely to be paid hourly, while graduate students may receive a salary.
- You'll be paid at least once a month.
- You'll be paid directly by the employer unless you ask for the money to go toward your college expenses.
Other financial aid options
The federal government isn't the only source of financial aid for college. Here are a few other ways you can get money for your degree:
- Scholarships: Through state governments, organizations, nonprofits, schools, and individuals, scholarships typically don't have to be paid back. They can be based on merit, financial need or other criteria. You can find scholarships you qualify for through databases, such as College Raptor's Scholarship Search tool.
- State grants: Almost all states offer financial aid to its residents. Most require students to complete the FAFSA and/or state-specific applications to apply. Each program is different, so research your state's options ahead of time.
- Employer tuition reimbursement: Some employers cover tuition for their employees or children of their employees. Program availability varies.
- Private student loans: Private student loans from financial institutions can help you cover the gap between what you have and what you need to attend college. However, they may have fewer protections, higher interest rates and fewer repayment options than federal student loans. It is important to do your research and understand your options.
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.
Understanding all of your financial aid options
Paying for college can feel intimidating, but the best way to prepare for covering the cost is to understand what's available to you. Federal financial aid is just one piece, but it could be a crucial one. Complete the FAFSA each year and 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.