How Free Financial Aid Works

Need-based Grants

Grants, unlike scholarships, are typically awarded through the federal government, state government or individual colleges and universities. Like scholarships, there are a number of different types of grants, but most can be categorized as either need-based or merit-based. Need-based grants, as the name implies, are awarded to students whose families are unable to afford the entire cost of college tuition. Still, don't think that because you or your parents can afford to contribute toward your college tuition that you shouldn't bother applying for need-based grant money. While you may not qualify for the maximum amounts of grant money available, you may still qualify for partial aid, and since grant money never needs to be repaid, any assistance is welcome.

Application for need-based and merit-based grants alike begins with a FAFSA. When filling out a FAFSA, students are asked to provide extensive information about both themselves and their parents, as well as the school they will be attending. Need-based grant money is then awarded on criteria such as the student's estimated cost of attending college, family income and liabilities (which help determine a family's Expected Family Contribution, or EFC), and other factors. One of the most common need-based grants is the Pell Grant, available to students under 24 years of age seeking an undergraduate degree. While the Pell Grants for the 2009-2010 academic year are worth a maximum of $5,350, the full award is reserved for individuals whose parent or guardian died recently in military service.

In addition to the Pell Grant, students may also qualify for additional grant money depending on their situation. The Federal Supplemental Educational Opportunity Grant (FSEOG), for instance, is awarded to Pell Grant recipients with the lowest EFC and can be worth up to $4,000 a year. A quick note on EFC: A family's ability to contribute toward college tuition will be considered in determining a student's EFC in all but a few unusual cases, even if the parents don't intend to help out. Of course, EFC doesn't factor into every type of grant. Read on to learn more.