Federal student aid comes in two flavors: self-help aid and gift aid.

Self-help aid programs allow you to earn money or to borrow money for school. The borrowed money, as it implies, must be repaid. The best kind is gift aid — you don’t have to work for it and you don’t have to pay it back.

Gift-aid programs include the Federal Pell Grant Program and the Federal Supplemental Educational Opportunity Grant, or FSEOG, program. These grants are generally available only to students who do not yet have bachelor’s degrees, but in some cases, they might be awarded to students enrolled in post-baccalaureate teacher certification programs.

Pell Grants vary from several hundred to several thousand dollars, depending on your need, the cost of attendance and whether you attend full time or part time.

FSEOGs go to students with exceptional financial need — those with the lowest expected family contribution, or EFC. As with Pell Grants, FSEOG award amounts range from several hundred dollars to several thousand a year, depending on the student’s financial need. Students who receive Pell Grants also are at the top of the priority list for receiving FSEOGs.

FSEOGs have a few limitations that Pell Grants don’t. For one, the amount of your FSEOG can be reduced if you receive other forms of student aid. Also, each school receives a limited amount of FSEOG money; when it’s gone, it’s gone. That’s why it’s very important to apply for financial aid as early as you can. You’ll have a better chance of obtaining FSEOG money if you’re eligible for it.

States cutting back
In recent years, states have been bucking the tradition of giving aid funds directly to colleges, allowing them to offer lower tuition rates. The new game in town involves giving aid directly to students and families. So it’s more important than ever to get the scoop on offerings. You can find your state agency’s home page online at
FinAid.

In addition to outright grants, there is other free state money — and discounts — you may want to pursue:

  • Merit scholarships. Often limited to students attending college in-state, these awards are based on a student’s academic achievement and help encourage the “best” students to remain in their home state. Some states promise merit scholarships to any graduating senior meeting a minimum requirement.
  • Portable grants. Some state grants allow recipients to attend college elsewhere. There may be restrictions on what states and colleges these grants can be used for, however.
  • Private college grants. Choosing an independent institution of higher learning doesn’t have to mean forgoing state aid. Special need-based grant programs may apply to in-state private universities.
  • Conditional grants. Meet the stated obligations, which may include maintaining a certain grade point average, and these grants are simply gifts. But for those who don’t meet those requirements, these gifts become loans.
  • Special purpose programs. Looking at nursing or teaching? These and other occupations with an employee shortage have been the impetus for some state programs that provide reduced, or even free, tuition for students planning to enter the field. Special purpose programs may also be geared toward veterans, parents or spouses of people killed or disabled during service to the community or country, and other groups.
  • Higher education vouchers. In 2004, Colorado became the first state to authorize this type of system. Under the College Opportunity Fund program, money traditionally used to subsidize tuition at state colleges goes directly to students as a stipend and can be used at the private or public institution of choice. The program was implemented, in part, because students, particularly low-income students and minorities, often went unaware of the state’s potential contribution to their college education. In addition, colleges now have to compete for the state funds by making their programs and services attractive to students.
  • Tuition discounts for in-state education. Attending an in-state public institution can save big bucks. And students not currently living in the desired institution’s state are not necessarily out of luck. Requirements to qualify for that
    in-state rate vary from state to state, but may be defined as anything from living in the state for a year to simply getting a driver’s license there or even purchasing a home in the state.
  • Home-tuition pricing. Using an in-state benefit doesn’t have to mean actually being a resident in that state. Through agreements between individual colleges, some students may only have to pay their own state’s resident tuition when they attend college in another state.
  • Tuition waivers. Likewise, out-of-state students may qualify for a tuition waiver. These waivers, allowed by some states and awarded at the institution’s discretion, mean reduced tuition for non-residents.
  • Reciprocity agreements. These deals allow some students to attend school out-of-state at reduced tuition rates and may be offered either by states or individual institutions. The rate is typically higher than the in-state resident rate but lower than what out-of-state residents pay. Often the incentive for institutions is less pressure to maintain separate programs in some fields of study. Because reciprocity deals are often between neighboring states, a student living near a state border may find it’s practical to attend the closest college to home, whether or not it means crossing that border. Different deals may apply, depending on what college is chosen and enrollment status. Washington state residents, for instance, can pay in-state tuition at Oregon community colleges or at Portland State if they take eight or less credits a semester. In some states, both public and private institutions participate in reciprocity programs. The programs are often administered by regional consortiums, such as the
    Southern Regional Education Board’s Academic Common Market, the New England Board of Higher Education’s
    New England Regional Student Program, the
    Western Interstate Commission for Higher Education’s Student Exchange Programs and the
    Midwest Higher Education Compact’s Midwest Student Exchange Program.

How to get it
To apply for most state loan, grant and scholarship programs, look no further than that trusty Free Application for Federal Student Aid, or FAFSA, form. The U.S. Department of Education forwards the information on FAFSA applications to the state student assistance agency in any state where the student is applying. And don’t miss those deadlines, or the state aid may be gone.