How Public Grants Work

To apply for a federal grant, students need to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA helps administrators assess students' financial need and eligibility. Students will need to divulge many facts about themselves, including:

The federal government expects the applicant's family to contribute to educational costs, too. The common term for this is the Expected Family Contribution (EFC). Most federal grants are meant for students who have a greater financial need and might otherwise not be able to afford to go to school. As a result, a student from a family making income above the cutoff isn't eligible no matter what that student's academic performance might be.

The Federal Pell Grant is one of the better-known grants available to students in the United States. Undergraduate students from low-income families are eligible for the Pell Grant as long as the student doesn't already have a bachelor's degree. In 2010, the maximum amount the government could grant a student under the Pell Grant was $5,500 [source: Federal Student Aid]. Congress determines the maximum payment -- the amount can change over time.

The federal government offers other grants in addition to the Pell Grant. Some, like the Federal Supplemental Educational Opportunity Grant, require the student to qualify for the Pell Grant first. Others, like the Teacher Education Assistance for College and Higher Education (TEACH), are meant for students with specific majors or career paths.

In all cases, federal grants come from a limited pool of resources. Once that money is gone, even an eligible student won't be able to secure a grant until Congress replenishes the grant budget.

Some states have their own public grant programs. Most states require grant recipients to be a resident of the state and to attend a state university or college. Some states also have limited funds set aside for students who wish to attend a private institution as long as it's within the state.

Many states reserve grants for those students with the most financial need. For example, Massachusetts has the Howard P. Rawlings Guaranteed Access Grant. This grant only goes to students who maintain a 2.5 GPA or better in high school and who also demonstrate a financial need. It's also available to students who did not apply for college directly out of high school.

Other states have grant programs that don't take financial need into account. One example of a state grant program is Georgia's Helping Outstanding Pupils Educationally (HOPE) program. It has both a scholarship and a grant element. Georgia students with a strong academic performance who are seeking a college degree are eligible for the scholarship. The HOPE Grant is meant for students seeking a technical certification or diploma and doesn't depend upon academic performance. Both the scholarship and the grant program receive funds from the Georgia Lottery.

Students eligible for the HOPE Grant will receive funds that cover the entire cost of tuition. They also receive a book allowance per semester. Other expenses, such as room and board, are not covered by the grant.

It's important for all college students to research financial aid options. Grants and scholarships can help a student cover expenses without adding the burden of repayment. Take everything into consideration -- your financial status, the career you hope to pursue and the college you want to attend. You may find a grant that's perfect for you.

Learn more about grants and financial aid through the links on the next page.