The federal government offers several student financial aid programs. These programs offer low-interest loans and grants for school.
Unlike the Department of Veterans Affairs' GI Bill benefits, these programs are paid by the Department of Education.
Federal Student Aid is designed to assist you in meeting the cost of tuition, books, fees and living expenses while you go to school.
That means that once the school has taken its share, the remaining loan or grant balance goes to you.
Related: What is the FAFSA? And Why You Should Care
Federal Student Aid Eligibility
It doesn't matter whether you're active duty, a reservist, a veteran, a retiree, a GI Bill beneficiary -- or none of the above -- you should be taking advantage of these programs. There are numerous examples of even senior active-duty members receiving federal loans and large grants.
Related: FAFSA deadlines
Remember: Grants are free money -- gifts that you don't repay!
Eligibility for most Federal Student Aid is based on financial need and on several other factors. The most basic eligibility requirements to receive Federal Student Aid are as follows:
- You must be a U.S. citizen or an eligible non-citizen.
- You must maintain satisfactory academic progress in college or career school, defined as having at least a 2.0 grade-point average and being on track to graduate within 150% of the normal timeframe.
Applying for Federal Student Aid
You can complete the Free Application for Federal Student Aid (FAFSA) on the FAFSA website.
Money-Saving Tip: FAFSA is a free application. However, some websites offer to complete the FAFSA for you, for upwards of $50. The FAFSA form takes a relatively short time to complete. It is worth your time to complete it yourself.
Every accredited school that is recognized by the Education Department will be eligible for some form of Federal Student Aid. The schools you select will send you information on how to get the funding you need to reach your education goals.
Available Loans and Grants
The following table gives you a quick breakdown on some of the types of federal loans and grants, applications, interest rates and monetary limits for the 2024-2025 academic year:
| Loan/Grant Program | Loan Fees | Interest Rates Undergrad | Interest Rate Postgrad | Annual Limit Undergrad | Annual Limit Postgrad |
| Pell Grant | N/A | N/A | N/A | $7,395 | N/A |
| Iraq and Afghanistan Service Grant (becomes maximum Pell Grant under special rule July 1, 2024) | N/A | N/A | N/A | $7,395 | N/A |
| Federal Student Education Opportunity Grant (FSEOG) | N/A | N/A | N/A | $100 - $4,000 | N/A |
| TEACH Grants | N/A | N/A | N/A | $4,000 | $4,000 |
| Direct Loans (Subsidized and Unsubsidized) | 1.057% | 6.53% | 8.08% | $5,500 - $12,500 | $20,500 |
| Direct PLUS (for Graduate and Professional Degree Students) | 4.228% | 9.08% | 9.08% | Full Cost Minus Other Aid | Full Cost Minus Other Aid |
To learn more about these and other Federal Student Aid programs, visit the Department of Education website.
Interest Rate Cap for Military Members
If you qualify under the Servicemembers Civil Relief Act, the interest rate on loans you had before entering military service may be capped at 6% during your military service. You must contact your loan servicer to request this benefit.
Loans
Federal student loans are financial aid that is either funded or backed by the federal government and paid directly through the school. Each type of loan has different fees (a percentage charged up front), interest rates and payment deferment plans.
Direct Loans
The two types of direct loans are subsidized and unsubsidized. These loans are identical in most ways, except how and when you begin to be charged interest.
Subsidized: Direct Subsidized Loans are for students with financial need. Your school will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the amount you can borrow. You aren't charged interest while you’re in school at least half-time and during grace periods and deferment periods.
Unsubsidized: You aren't required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, your school will determine the amount you can borrow. Interest accumulates from the date of issue with no exceptions. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.
Grants
Grants are free money for school paid to you through the school's business office. After your school bills are paid, the remaining balance goes to you. There are several types of grants.
Pell Grants
You must be an undergraduate student who doesn't have a bachelor's or professional degree. If you are enrolled in a post-baccalaureate teaching certificate program, you also may receive a Pell Grant. Depending on your financial need and tuition costs, you can receive up to $7,395 each for the 2024-2025 school year.
FSEOG
FSEOG is short for Federal Supplemental Educational Opportunity Grants. These grants are reserved for the most needy candidates and can be paid in addition to Pell Grants. FSEOG grants are limited from $100 to $4,000 each year.
Iraq and Afghanistan Service Grants
You may be eligible to receive the Iraq and Afghanistan Service Grant if:
- You are not eligible for a federal Pell Grant on the basis of your expected family contribution but meet all other requirements; and
- Your parent or guardian was a military member who died as a result of military service performed in Iraq or Afghanistan after the events of 9/11; and
- 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.
Iraq and Afghanistan Service Grant Details.
TEACH Grants
The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program provides grants of up to $4,000 a year to students who are completing or plan to complete course work needed to begin a career in teaching.
As a condition for receiving a TEACH Grant, you must sign a TEACH Grant Agreement to Serve in which you agree to (among other requirements) teach:
- in a high-need field.
- at an elementary school, secondary school, or educational service agency that serves students from low-income families.
- for at least four complete academic years within eight years after completing (or ceasing enrollment in) the course of study for which you received the grant.
IMPORTANT: If you do not complete your service obligation, all TEACH Grant funds you received will be converted to a Direct Unsubsidized Loan. You must then repay this loan to the U.S. Department of Education, with interest charged from the date the TEACH Grant was disbursed.
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