Pursuing a higher education can open many doors, enabling an individual to take better control of their future. However, attending college can cost a student potentially tens of thousands per year! If you’re wanting to earn a degree, it’s important to have a plan for how you’re going to handle the costs. You may want to consider what type of financial aid opportunities you’re eligible for. Federal education grants are available to all types of students and can significantly decrease your education expenses.
Financial aid is widely available to U.S. students. In fact, the 2023 budget dedicated to federal aid is $79.6 billion! As a result, the Department of Education will be able to distribute much needed funds to countless students. In addition to financial aid, you want to consider other pathways to save money while you’re in school. In order to start saving, you need to know what’s out there and how you can take advantage of different opportunities!
Federal Education Grants Overview
College students can benefit from seeking financial aid to help with their college expenses. A few examples of the different federal education grants out there are:
- Pell Grant
- TEACH Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
Each of these grants is awarded for a different purpose. Students can decide to complete a Free Application for Federal Student Aid (FAFSA) before each school year. This single application actually determines a student’s eligibility for the numerous financial aid opportunities out there. These grants are beneficial because they can relieve part of the cost of common educational expenses. These can include tuition, textbooks, and even on-campus living expenses. In addition to that, they don’t usually require repayment. Some grants are reserved specifically for students that don’t make a lot of income. Meanwhile, there are different opportunities that are awarded based on merit or other factors.
Pell Grant
The Pell Grant may be the most well-known grant opportunity on this list. Students are awarded this type of grant based on their financial situation. Pell Grants are only available to students that haven’t earned their bachelor’s, professional or graduate degree yet. For the 2023 – 2024 school year, the maximum award is up to $7,395! Individual award amounts are based on a student’s details such as:
- Financial situation
- Enrolled in school full or part-time
- Annual cost of tuition
TEACH Grant
Eligible students can get up to $4,000 per school year in financial aid with this grant. The Teacher Education Assistance for College and Higher Education (TEACH) Grant is awarded to students planning to pursue or are currently pursuing a career field in teaching. One of the requirements is that the student needs to complete a teaching service obligation. A key takeaway from the service obligation is that the student will need to commit to working in low-income school districts after graduation.
Federal Supplemental Educational Opportunity Grant (FSEOG)
Similar to the Pell Grant, this opportunity is only available to students that have a financial need. Very low-income undergraduate students can get up to $4,000 each school year towards their education expenses. The Federal Supplemental Educational Opportunity Grant (FSEOG) unfortunately has limited funding. A good rule of thumb is to complete a FAFSA as soon as possible prior to each academic year. This way you don’t miss out on beneficial opportunities such as this one!
Additional Ways that Students Can Save
Grants are a great opportunity for students to save on their schooling. However, they aren’t the only opportunity that can result in savings. Students can also take advantage of tax credits that can save thousands per year. The following two are more commonly known among students in need:
American Opportunity Tax Credit (AOTC)
The American Opportunity Tax Credit (AOTC) can provide up to $2,500 each year. Eligible students can get the credit as a form of reimbursement for a portion of their education expenses. AOTC only applies to a student’s expenses incurred during the first four years in college. Furthermore, students can get up to 100% back of their first $2,000 spent on certain educational costs. After that, they can get up to 25% of the next $2,000 in expenses.
Lifetime Learning Credit
In addition to the AOTC, students can also take advantage of the Lifetime Learning Credit. This tax credit offers up to $2,000 per taxpayer per year. In order to get this, the student must have dealt with qualifying tuition expenses and other similar costs.
Federal Loan Opportunities
Federal education loans can help students afford college, but they may also lead to increased student debt. Balancing grants, tax credits, and loans can help you successfully navigate the financial challenges of pursuing a college degree. Taking out a loan may be necessary when federal grants aren’t enough to cover all of your costs. Loans may not be everyone’s first choice. However, you can benefit from some of the unique advantages to federal education loans. There are several types of federal education loans that you can apply for. The most common ones include:
- Subsidized Loans: These are need-based loans with interest paid by the government. This applies to when a student is enrolled either full-time or half-time or during deferment periods.
- Unsubsidized Loans: These are not based on financial need and accrue interest from the time it was borrowed until full repayment.
- PLUS Loans: Available for graduate/professional students and parents of dependent undergraduate students who do have a positive credit history.
To Sum it Up
Overall, federal education grants are an effective way for students to save money on education expenses. The different financial aid opportunities available to eligible students include:
- Pell Grant
- TEACH Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- Iraq and Afghanistan Service Grants
Not all grants are awarded for the same reason. Some are based on a student’s financial ability to cover their own education expenses. Meanwhile, others are awarded based on a student’s academic performance or future career choice. Regardless, each grant shares in the fact that they can be used for costs such as tuition, textbooks, and other related expenses.
Unfortunately, even the maximum values of each grant typically can’t cover all of a student’s costs. This is why it’s important to consider other options such as federal loans. There are also different tax credits that students can utilize when filing each year to save money on their education. Pursuing a degree may seem impossible! However, a combination of sound financial planning and determination can no doubt turn your goal into a reality.
