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Federal Student Aid: How Much Does it Actually Help?

  • Post author:Bob Haegele
  • Post last modified:January 14, 2024

There are many different types of federal student aid (FSA). Although the amount of information this creates can seem overwhelming, it doesn’t have to be.

The easiest way to understand all of the options available is to approach it from the right angle.

You probably won’t be eligible for every type of federal student aid. Many of them target specific groups.

More importantly, you cannot receive more student aid than your cost to attend school.

Each type of federal student aid also has a different maximum amount. Thus, you will want to optimize your student aid to be sure you are getting the best deal possible.

Federal Student Aid is the organization that provides all of these grants plus other forms of relief.

Federal Pell Grants

Federal Pell Grants are one of your options when applying for student aid.

These are different from some other types of grants. That is because Pell Grants are available to all eligible students. Pell Grant eligibility only requires that students meet and maintain the basic eligibility requirements.

As long as those requirements are met, you should have no difficulty receiving one of these grants.

Pell Grant Limits

There are limits to how much money you may be granted through a Federal Pell Grant, however.

The main thing to consider is the upper limit. The amount changes every year, but for 2018-2019, it is $6,095.

But there are also caveats to this limit. For example, your Expected Family Contribution may lower your limit. This is a complicated formula FSA determines using the information on your FAFSA.

Additionally, the following can influence your Pell Grant limits:

  • Amounts set by your school
  • Your status as a full-time or part-time student
  • Whether you plan to school for the entire year also influences your Pell Grant limits

Federal Student Aid Based on Financial Need: FSEOG

Federal Supplemental Educational Opportunity Grant (FSEOG) is another type of federal student aid. As the heading suggests, however, this type is not guaranteed to all students.

Instead, each student’s financial need will determine their priority in receiving it.

The total amount each student can receive ranges from $100-4000. Once the entirety of the student aid allocated to the school has been disbursed, no more funds will be available.

Each school sets its own deadline for FSEOG applications.

Eligibility for Federal Student Aid

In general, you must be able to show that there is a financial need.

In addition, you must be a US citizen or have equivalent citizenship status. Certain groups do not need this, though. Those from the Federal State of Micronesia, for example, do not need a Social Security number.

Males who receive federal student aid must also register for Selective Service.

Fill out the FAFSA to apply for federal student aid.

Maintaining Eligibility

In addition to maintaining the basic eligibility criteria, students must show satisfactory academic progress and fill out the FAFSA each year.

“Satisfactory academic progress” is not something that is set by the federal government. Each school has its own standards for what exactly this means. However, it will typically include things such as:

  • Minimum GPA
  • How quickly you must make progress toward graduation
  • How does taking a class, failing classes, etc. affect your progress

If you have specific questions about academic progress, contact your school’s financial aid office.

Regaining Eligibility

There are many reasons you could lose your federal financial aid eligibility. In addition to no longer meeting the basic eligibility criteria, other circumstances may apply.

I mentioned in another post that some teachers chose to change schools due to their TEACH Grants being converted to loans.

This is actually one example of losing eligibility. Those teachers must be part of a certain teaching program to be eligible. As a result, those whose loans were converted back into grants would also have to move back into a program that makes them eligible for federal student aid.

Federal Student Aid for Military Servicemembers

The various branches of the military offer extremely generous financial aid. Don’t overlook this option – especially if you are already considering the military.

One of my former college roommates went this route, and it was a phenomenal deal. While I have often lamented the burden that was my student loans, my old roommate didn’t have this issue.

As a member of the Navy ROTC, he was awarded a full scholarship. That not only included tuition but also covered room, board, and a meal plan. The whole shebang.

And remember that this is a private university. It is definitely not a cheap school to attend.

For more information about scholarships and other aid available for servicemembers visit FSA.

Work-Study Jobs

Work-study jobs involve working part-time to help cover the cost of attending school. The student’s area of study is usually emphasized if possible.

These jobs pay at least the federal minimum wage but may pay more. It mostly depends on the typical criteria – the skills required to do the job. You can expect industry standards to apply here.

So, someone majoring in business administration would probably earn more than someone in elementary education. That is, of course, assuming both participants are working jobs that apply to their program.

Note that there is also a limit to how much you can earn through your Federal Work Study program. Your school will set this limit, so you can’t work more hours than the program would allow.

Tax Benefits

Who doesn’t like tax credits? With college costs continuing to outpace inflation, we need all the help we can get. Luckily, there are several tax credits and other types of relief that may help with college costs.

  • American Opportunity Credit
  • Lifetime Learning Credit
  • Coverdell Education Savings Account

In addition, you may be able to claim a student loan interest deduction on your taxes. This allows you to claim up to $2,500 per year.

Federal Student Aid also mentions that you can withdraw from an IRA to pay for college. Personally, I do not recommend this option. The reason I can’t recommend it is because IRAs are retirement accounts.

Whether you have a traditional IRA or a Roth, the money in that IRA grows tax-free. But, of course, if you withdraw from it, that money can no longer grow.

Not only that but the money you withdraw from the IRA may be taxed as income. FSA does not elaborate on this, but in general, traditional IRAs require you to pay tax when making distributions.

The only real benefit is that no early withdrawal penalty applies, which it normally would with IRAs.

Still, this should be more of a last resort. Hopefully, through proper planning, it won’t be necessary.

Good, But Not Good Enough?

There are many different types of federal student aid. While the current options can certainly help to cut back on costs, most of them won’t result in a free ride.

Of course, not everyone would agree that any type of education should be free in this country. There is certainly merit to this argument because this places the burden on the taxpayer. Still, college continues to get increasingly expensive. As those costs continue to rise, attending college will become increasingly difficult.

Whether the burden is lessened through lower costs or more aid, eventually, something’s gotta give. I think it will be interesting to see how things develop in the 21st century. Whether the government helps more or colleges help more – or both – changes will eventually be needed. That much is for sure.


Hey there. My name is Bob Haegele and I'm a personal finance writer who has been freelancing since 2018. Since then, I've built a six-figure career as a freelance writer. My work has been featured in Business Insider, Forbes Advisor,, USA Today, and many other outlets. Interested in starting a blog of your own? Check out my post on starting a blog.

This Post Has 2 Comments

  1. Casey Rumsey

    Great article! I went to school for free off of Pell Grants. Often times I would get a $500 check each semester from what was left over for books, living, etc.

    1. Bob

      That’s helpful! Would have been nice to have gotten that myself, hah.

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