The FAFSA allows you to apply for seven grants. Grants, like scholarships, do not have to be paid back. They include the Teacher Education Assistance for College and Higher Education Grant (TEACH Grant), the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG) and the Academic Competitiveness Grant (ACG). Others include the National Science & Mathematics Access to Retain Talent Grant (National SMART Grant), Institutional Grants and the Iraq and Afghanistan Service Grant.
Colleges provide their own grants that are often based at least in part on a student's financial need as determined by the FAFSA. Colleges may not use the FAFSA's way of reckoning financial need itself, but they may use the FAFSA as a source of information to determine grant eligibility. A common example of a federal grant is the Pell Grant, which is often awarded to undergraduate students who do not yet have a bachelor's or professional degree. However, it may be given to a student pursuing a post-baccalaureate teacher certification program. For the 2011-12 award year, the maximum award amount is $5,550.
Colleges individually administer the FSEOG, Federal Work-Study and federal Perkins Loan programs. Not all colleges take part in all of these programs. How much you get from any of these programs will depend on your financial need, how much other aid you receive and how much money your college has at the moment for student aid from the federal government. Once the money awarded to a college for these programs is awarded for a year, no more is available, so apply early.
The FSEOG grant is awarded to those with exceptional financial need and is worth between $100 and $4,000 per year. If you get Federal Work-Study, you will be paid by the hour if you are getting your bachelor's degree, and the amount you can earn will not exceed your award amount. If you work off campus, you will probably work in a public agency or private non-profit. The federal Perkins Loan is a 5 percent interest loan available to undergraduate and graduate students who have exceptional financial need. The maximum amount for undergraduate borrowing is $5,500 per year, and for graduate students, it is $8,000 per year up to $60,000 total, including undergraduate amounts.
Stafford Loans are low-interest loans available to students. Direct Subsidized Loans are given to students with financial need. Interest is not charged while you are in school at least part time, or during deferment and grace periods. Direct Unsubsidized Loans do not require that students show financial need. The school will determine how much you can borrow. The unsubsidized loan accumulates interest while you are in school. You have the option, however, of paying the interest while you are in school and during deferment, forbearance or grace periods. If you do not pay on the interest during these periods, the amount of the loan will increase over time.
If you are a dependent student, your parents can apply for a Direct PLUS loan. However, they must meet certain eligibility requirements, such as having good credit (although a co-signer can sign the loan if the credit history is poor). The student and parent have to be U.S. citizens or eligible non-citizens.
Independent graduate and professional degree students can take out a Direct PLUS Loan. The student also has to have a good credit history and meet the conditions and terms for PLUS Loans for parents. The interest rate of this loan is fixed at 7.9 percent. The maximum amount you can borrow is calculated by subtracting your other financial aid from the cost of attendance of your college.