The high cost of a post-high school education forces many families to search for “gift aid”. Gift aid is money available to college students that does not need to be paid back. Gift aid is also money that does not come from one’s household – such as a parent or grandparent. Grants are one type of this so-called “gift aid”.
There are two basic types of grants to help fund college expenses. The first, and by far the most common, are Federal grants. Each year the Federal Government though the Department of Education sets aside a certain amount of money designated for students to help fund their education. Unlike loans, this type of funding does not need to be paid back. And of course, it does not accrue interest. The
“Pell Grant” is one of the most common Federal grants.
The second major type of grant funding happens on a local level – either at the State or immediate locality. Many States have their own educational funding program which awards grants to students who typically attend State colleges. Taxes revenue is the source of grant funding. As public education is normally considered a public good – something that benefits everyone – it is in the interest of the people (tax-payers) to see that education is affordable.
Many families have high expectations that their student will qualify for grant funding. This expectation often leads to great disappointments and frustrations.
To qualify for a grant, typically one has to have a relatively low “Expected Family Contribution”, or “EFC”. A family’s EFC is calculated each year based on the information submitted on the Free Application for Federal Student Aid”, or FAFSA. Grant funding requires a student to demonstrate “financial need”. Many families find that even though they do not “make a lot of money”, their EFC is nonetheless too high for their kids to qualify for grants. Some grants have as an additional requirement a minimum level of academic achievement, i.e. a minimum GPA.
Grants awarded at the local level (as opposed to Federal grants) are often departmental related. This means that grant funding is given to those students who are in a certain major – such as engineering or nursing or economics. This type of grant funding often takes place in the 2nd, 3rd or 4th year of college – rarely in the first.
Grant funding differs from scholarship funding in that grant funding is based normally on financial need, not on meritocracy. As one can imagine, grant funding is not guaranteed from one year to the next. If the household income increases (as reported on the FAFSA), then typically the amount of grant funding will decrease, if not eliminated altogether. There also is no law that says Congress cannot change the parameters – making it either easier or harder to qualify for this type of student financial aid.
Funding a post-high school education requires a practical knowledge of how both the Government and colleges award aid. Many families unknowingly make costly mistakes. These families do not take the minimum amount of time necessary to figure out what education is affordable and of value.
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