What Is Government Funded Aid?

By Kristen May , last updated November 1, 2011

Government funded aid is money that you can receive for college from the federal or state government. The government sets aside this money for students, and might either distribute a limited amount of funds between the most highly qualified applicants, or have an unlimited amount of funds to distribute to all students who qualify based on the government guidelines. When you are looking to attend college, use government aid as one of your major sources of funding for your education.

Government Aid Programs

The federal government has three major types of aid programs for students. The grant program distributes grants to students with high financial need. The most common grant is the Pell Grant, which is for up to $5,550 per year for full-time students. The federal work-study program gives colleges money to create jobs on campus or in the community and pay qualifying students at least minimum wage to work these jobs during the school year. The federal student loan program offers several types of loans to students who need to borrow money to afford college.

Because loans are the lowest-cost aid for the government to issue, they are the most common. The federal government pays the interest for subsidized Stafford and Perkins loans for students with high financial need while they are in school. Any student with a half-time course load or higher can borrow with unsubsidized Stafford student loans from the federal government. Graduate students and parents of undergraduate students can use PLUS loans, also from the federal government, although these loans require a credit check.

Most states also have supplementary financial aid programs that offer grants and loans to students who attend school in the state. However, some states limit their aid to students who attended high school in that state as well. For example, in California, students who attended high school there and are attending college in California as well can get Cal Grants to help pay for school. State grants might be based on financial need or on the student's academic merits, including grade point average. Many states also offer student loans at interest rates comparable to federal student loans and lower than most private student loans.

Applying for Aid

Apply for all types of government-funded financial aid by filling out the Free Application for Federal Student Aid (FAFSA). The Department of Education forwards the results to the state agency in the state where you attend college, which automatically begins your state financial aid application as well. In some states, you must fill out a supplementary state aid application. Contact your state's financial aid agency to find out what steps you need to take.

You should submit the FAFSA prior to each school year. You cannot submit it earlier than January 1 because it requires financial information from the previous calendar year. If you would like state aid, submit your application as soon as possible, because states limit their aid much more than the federal government does. Deadlines vary from one state to another, with the earliest priority deadline in Connecticut on February 15. Many states set priority deadlines in March, and some just recommend applying as early as possible.

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