The Types of Federal Student Assistance Programs
The U.S. Department of Education gives out a substantial amount of money to help students and their families afford the costs of higher education. Student financial aid from the federal government requires that you need to fill out the FAFSA (Free Application for Federal Student Aid).
Federal Pell Grants: Pell grants are designed for undergraduate students who haven’t yet earned a bachelor’s or professional degree. These grants, which are given to students based on need, are especially great because they don’t have to be repaid — but the most you can get is $4,050 per year.
Need is defined as the difference between what a student (and her parents or guardians) can pay and the actual cost of her education.
Federal Supplemental Educational Opportunity Grant: The FSEOG is a program designed for undergraduate students with “exceptional financial need.” In plain English, these students have to have a very low expected family contribution (EFC) because of obvious poverty or immense financial drain on their parents (such as supporting a lot of other kids in college or caring for elderly parents).
Like the Pell Grant, FSEOG monies don’t have to be paid back.
If you qualify, you can get between $100 and $4,000 a year, depending on when you apply, your financial need, and the funding offered at the school you’re attending.
Hope Scholarship and Lifetime Learning Credits: Two of the best tax incentives aimed at middle-class parents of college students are the Hope Scholarship Credit and the Lifetime Learning Credit. Both of these programs offer tax credits to partially compensate parents (or other tuition payers) for paying their dependent students’ college tuition. Independent students can also qualify for these credits. With these credits, you can deduct a certain amount of your education costs from your annual income to get a break on your taxes.