Higher Education Grants: A Comprehensive Guide

Looking at a college’s published tuition and fees can be a shock - especially for learners who are balancing their education with professional and caretaking responsibilities. The good news is that many students don’t pay the “sticker price” you see online. That’s largely thanks to grants, which are an essential funding source for many students. This article explains higher education grants, exploring what they are, how they work, and how to access them.

What is a College Grant?

Grants are a form of financial aid that fall into the category of “gift aid,” along with scholarships. That means it’s money that’s given to you outright rather than loaned. Unlike student loans, grants are not meant to be repaid. Instead, grants are funds that simply reduce the cost of your college education. While the terms “grant” and “scholarship” are sometimes used interchangeably, grants usually refer to need-based aid, meaning that it is provided to students who don’t have the financial ability to pay for the entirety of their degree themselves. Scholarships, on the other hand, are often awarded based on “merit” (such as high grades) or having certain characteristics, such as belonging to a minority group, being from a particular area or having a specific life experience. When it comes to paying for school, grants are among your best options.

Understanding Grant Repayment Obligations

Most grants don’t have any additional strings attached. However, if your grant is tied to specific criteria which you do not fulfill (for example, if you receive a federal grant for future teachers and you choose not to go into teaching), you will be required to either repay that grant or convert it to a loan. The exception to this rule is if you use grant aid to pay for a semester of college and then withdraw before completing the semester. In that case, you may be expected to repay those funds. That’s why it’s always wise to carefully read the terms of any grant you receive to understand potential risks and obligations.

Who is Eligible for College Grants?

Most college grants are awarded to students enrolled in an eligible program who lack the financial resources to pay for a degree. All federal grants, and most other grants, are open to students of any age. Some grants are designated specifically for undergraduate study, while others are available for graduate or professional programs. Some states offer grants to specific groups of students, such as adult learners, who also demonstrate financial need. Educational institutions and outside organizations may offer grants solely based on financial need or on financial need in combination with other characteristics.

Types of Grants Available

A number of different types of grants are available to help you pay for college, and understanding the differences can be confusing! Here’s what you should know about some of the grants you might be eligible to receive.

Federal Grants

The federal government awards several different types of grants based on student financial need and other criteria. The Federal Pell Grant program, authorized by Title IV-A-1 of the Higher Education Act of 1965, (HEA; P.L. 89-329), as amended, is the single largest source of federal grant aid supporting postsecondary education students. In award year (AY) 2019-2020, approximately 40% of undergraduates received Federal Pell Grants. Unlike loans, students are not required to repay Pell Grants.

Pell Grants: Pell Grants are awarded based on exceptional financial need. They are awarded for students pursuing their first bachelor’s degree. Lifetime eligibility for Pell Grant funding is capped at the equivalent of 12 full-time semesters, though students can receive the grant at various enrollment levels. The amount of funding awarded varies based on financial need. In 2020, nearly 7.3 million students are expected to receive Pell Grant money to pay for college. That means that nearly 39 percent of undergraduate students receive the award.
Pell Grant eligibility will be linked to family size and the federal poverty level, expanding access to federal student aid. Pell recipients may receive more aid, some will receive the maximum Pell Grant. Restrictions on Pell Grant Eligibility to begin July 1, 2026. Changes to Pell Grants are included in the Big Beautiful Bill passed into law on 7/4/2025.
Students enrolled less than half-time will not qualify. Full-time enrollment for undergraduate students is typically 12 or more credit hours per semester. A Student Aid Index (SAI) over double the Pell Grant maximum disqualifies applicants. Today, the maximum Pell Grant for the 2025-2026 academic year is set at $7,395. Beginning with the 2026-27 award year, students are ineligible to receive a Federal Pell Grant if they receive grants or scholarships from nonfederal (state, institutional, private, etc.) sources in an amount that equals or exceeds the student’s cost of attendance (COA). This is true even if the student is otherwise eligible for a Pell Grant. Foreign income will now count toward eligibility. Changes to in the Big Beautiful Bill passed into law on 7/4/2025 include Workforce Pell Grants for short-term, high-quality job training programs.
Federal Supplemental Educational Opportunity Grants (FSEOGs): Federal Supplemental Educational Opportunity Grants (FSEOGs) are also awarded to students with exceptional financial need. Priority is given to Pell Grant recipients. It’s important to note that not all schools participate in the FSEOG program, and funding limits vary between schools.

Read also: Key Trends in Education
Teacher Education Assistance for College and Higher Education (TEACH) Grants: Teacher Education Assistance for College and Higher Education (TEACH) Grants are awarded to education students who agree to teach full time for four years in a high-need area. Unlike other federal grants, this grant is contingent on specific action.
Children of Fallen Heroes Scholarships (CFH): Children of Fallen Heroes Scholarships (CFH) are available to Pell-eligible students whose parent or guardian died in the line of duty while performing as a public safety officer and who were under the age of 24 or enrolled in college at the time of their parent’s death.

State Grants

Most states run their own grant programs for college students. Often, grant funding is limited to in-state institutions. In addition to grants based on financial need, some states offer additional grant funding for students who meet certain criteria or belong to specific groups.

Institutional and Private Grants

Many colleges and universities offer additional grant funding based on financial need. Typically, these types of institutional grants are meant to fill the gap between available federal and state grant funding and the cost of attendance. Some schools also offer grant funding to members of specific groups or students who enroll in specific programs. Nonprofit organizations are also a source of grant funding for some students.

How Much Can You Get in Grants?

Federal grant programs have yearly limits that are revised annually and lifetime limits for how much a specific student can receive. The amount of money you receive will be tied to the amount that you are determined to be able to afford based on the Free Application for Federal Student Aid (FAFSA).

It’s important to note that receiving significant outside support for your education, like scholarships for your grades or funding for your employer, may reduce your eligibility for certain grants. That’s because that funding shrinks the gap between what you can pay and the cost of your education. States, institutions of higher education and outside organizations set their own limits for grants.

How to Apply for Grants

To apply for federal grants, you must complete and submit the Free Application for Federal Student Aid (FAFSA), providing requested financial (e.g., adjusted gross income) and other information. FAFSA, or the Free Application for Federal Student Aid, is not a loan or aid. Instead, it’s a form that students fill out to apply for federal and state financial aid.

The FAFSA, asks questions about your family situation, income and assets (including savings and investments). Depending on your age, marital status and other circumstances, you may also need to provide information about your parents’ or spouse’s finances. Colleges and universities use the FAFSA to determine how much you or your family can afford to contribute to college and assess your eligibility for federal grants as well as grants that the school provides directly to students.

State departments of education set their own requirements for state-funded which may require residents to complete additional forms. Remember that for the most part, state grants must be used at in-state institutions. Narrowly focused programs, like the TEACH grant for future teachers, may require additional application processes, as might grant programs run by outside organizations.

The first step is to file the Free Application for Federal Student Aid, known as the FAFSA. After two years of delayed releases, families can once again begin filling out the form Oct. 1 for the 2026-2027 cycle. The deadline for filing the FAFSA is June 30 of each academic year. For instance, the 2026-2027 FAFSA is due June 2027. But that deadline is for federal financial aid only. Many schools and colleges that use the FAFSA to determine aid set earlier deadlines. Some schools - mostly private colleges - use a supplemental form called the CSS Profile to determine how to give out their own funds. This form is more detailed than the FAFSA.

The initial submission fee for the CSS Profile is $25; each additional report is $16. But fee waivers are available. Sometimes, a student must complete additional applications to be considered for scholarships or private aid.

Understanding the Pell Grant Program

The Federal Pell Grant program, authorized by Title IV-A-1 of the Higher Education Act of 1965, (HEA; P.L. 89-329), as amended, is the single largest source of federal grant aid supporting postsecondary education students. The program provided approximately $31 billion in aid to approximately 6.5 million undergraduate students in FY2023. Pell Grants are need-based aid that is intended to be the foundation for all federal need-based student aid awarded to undergraduates.

To apply for a Pell Grant or any HEA Title IV student aid, students must complete and submit the Free Application for Federal Student Aid (FAFSA), providing requested financial (e.g., adjusted gross income) and other information. When the FAFSA is processed, the individual's student aid index (SAI) is calculated. The SAI is the amount expected to be contributed by the student and the student's family toward postsecondary education expenses for the upcoming academic year. After processing, each applicant receives a Student Aid Record (SAR). Each institution of higher education (IHE) designated by the applicant on the FAFSA receives an Institutional Student Information Record (ISIR).

Among the requirements generally applicable to the HEA Title IV student aid programs for AY2024-2025 are the following:

Students must be accepted for enrollment or enrolled in an eligible program at an eligible IHE for the purpose of earning a certificate or degree.
Students must maintain satisfactory academic progress while enrolled.
Students must not be in default on a Title IV student loan, or have failed to repay or make an arrangement to repay an overpayment on a Title IV grant or loan, or be subject to a judgment lien for a debt owed to the United States.
Students may be disqualified for an unusual enrollment history-receiving HEA Title IV aid at multiple schools in the same semester, or receiving aid and withdrawing before earning any credit.

Specific eligibility requirements for the Pell Grant program include the following:

Students must be enrolled in an undergraduate course of study.
For incarcerated students to be eligible for a Pell Grant, they must be enrolled in a prison education program (PEP).

The amount of an eligible student's Pell Grant award is determined on the basis of a set of award rules. In general, these award rules are designed to ensure that the students with the least financial resources (as determined by the families' AGI or the students' SAI) receive the highest Pell Grant awards in each award year. As student financial resources increase or AGI and SAI increase, Pell Grant awards decrease until they phase out completely. Additionally, Pell Grant awards are prorated for students who attend on a less-than-full-time, full-year basis. An important feature of the Pell Grant award rules is that the grant is determined without consideration of any other financial assistance a student may be eligible to receive or may be receiving. This reflects the intention to make the Pell Grant the foundation of federal need-based aid in an undergraduate's financial aid package.

Key Concepts of the Pell Grant Program

Award Year: The HEA Title IV award year begins the first day of July in a given year and ends the last day of June the following year.
Academic Year: The HEA Title IV academic year is an IHE-determined instructional period. For credit hour programs, the academic year requires a minimum of 30 weeks of instructional time. For a clock hour program, the academic year requires a minimum of 26 weeks of instructional time. A full-time, full-academic-year student is expected to complete at least 24 semester hours, 36 quarter credit hours, or 900 clock hours.
Payment Period: The payment period is an academic period or period of enrollment for which Pell Grant aid is disbursed. Payment periods differ depending on the IHE's academic calendar and the length of the program of education.
Cost of Attendance (COA): For Pell Grant award purposes, the cost of attendance (COA) is an IHE-determined measure of the estimated educational expenses for a student enrolled full-time for a full academic year. In general, it is the sum of (1) tuition and fees; (2) an allowance for books and supplies; (3) an allowance for transportation; (4) an allowance for miscellaneous personal expenses; (5) an allowance for living expenses (i.e., housing and food); and (6) for a student with dependents, an allowance for costs expected to be incurred for dependent care.
Discretionary Base Maximum Award: The discretionary base maximum award is the amount specified in annual appropriations bills for accounts funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies.
Mandatory Add-On Award: The mandatory add-on award is an amount established by the HEA. Since AY2017-2018, the mandatory add-on award has been $1,060.
Total Maximum Award Amount: The total maximum award amount is the maximum Pell Grant amount that a student may receive in an academic year. The total maximum award is the sum of the discretionary base maximum award and the mandatory add-on award.
Minimum Pell Grant Award: The minimum Pell Grant award is the smallest annual award amount for which a student must qualify to receive a Pell Grant award. In other words, a student must qualify for at least this minimum amount to be eligible for the program.
Independent Student: An independent student, generally speaking, is an individual who is age 24 or over or meets another criterion specified in the HEA.
Adjusted Gross Income (AGI) and Student Aid Index (SAI): The HEA utilizes two primary student financial indicators for determining whether an otherwise eligible student qualifies for a Pell Grant-adjusted gross income (AGI) and student aid index (SAI). Both indicators reflect the student's and the student's family's financial resources.

Navigating Financial Aid Resources

Financial aid is a broad term that covers many types of financial assistance to help students cover the cost of their education. The primary goal of financial aid is to bridge the gap between a student’s Expected Family Contribution (also known as the Student Aid Index) and the total cost of a student’s education. Financial aid can be a lifeline for many students, providing the necessary resources to pursue their career dreams. Broadly, financial aid can be categorized into four types: scholarships, grants, loans, and work-study programs. While all these types of financial aid aim to make education more affordable, they differ in a few key ways. Scholarships and grants are types of “gift aid” that do not need to be repaid, while loans must be repaid with interest. Work-study programs, on the other hand, provide students with part-time employment to help pay for their education expenses. The federal government is the largest source of financial aid for college. This aid comes from grants, loans, and work-study programs. However, students can also receive financial aid from state governments, colleges, universities, and private organizations.

Financial Aid Award Letters

Financial aid award letters typically go out in winter or early spring - usually after or at the same time as a college acceptance offer.

Appealing a Financial Aid Award

The process of appealing an award is known as a professional judgment review. Students need a legitimate reason for an appeal, including a change in their family's financial circumstances after the FAFSA was submitted due to recent job loss, divorce, death in the family, out-of-pocket medical expenses or care costs needed for an elderly parent, experts say.

Families can also sometimes negotiate for additional merit funding, Vasconcelos says. "Explain that while you'd really love to attend their school, this other school is luring you away with additional funding. (Ask about) any additional funding opportunities available from their school. Families are often surprised at how often schools say yes and will throw an extra couple thousand dollars their way to try to entice them to enroll."

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