No strings attached: Your guide to college grants

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Grants help pay for college and reduce student debt.

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Are you or a loved one heading to college? Most people (at least 85%, according to the National Center for Education Statistics) will rely—at least in part—on financial aid to pay for college. Aid comes in several forms, including student loans, scholarships, work-study programs, and grants.

College grants don’t have to be repaid. If you qualify for any grants, take them without hesitation. They’re often—but not always—issued to students based on financial need, and many come from the government.

The U.S. federal government offers grants to help those with financial need pay for school. The main federal grant programs include:

In most cases, these college grants won’t cover all of your costs. They can reduce what you pay or how much student debt you’ll take on, but they will rarely leave you with nothing to pay.

And remember, you have to meet specific requirements to qualify. Not everyone is eligible.

Many states also offer their own grant programs. Common requirements for state grant programs include:

Not all states have the same requirements, so it’s important to double-check your eligibility before moving forward. State grants can provide supplemental funds on top of federal grants and other student financial aid.

Finally, other organizations sometimes offer grants to students. Nonprofit organizations and businesses might offer grants to students studying specific subjects who show promise and demonstrate financial need.

Students who are beyond their first two years of undergraduate schooling, or are in graduate school, may be able to participate in a grant program. Organizations offer grants to university programs or projects, and students who further the supported work might receive a stipend as part of the grant. Once again, such grants can reduce your reliance on student loans and other types of financial aid.

Most need-based college grants are offered through the federal government. The easiest way to apply is via the Free Application for Federal Student Aid (FAFSA).

When you submit your FAFSA, you provide financial information that’s then sent to the schools you designate. The schools determine which grants you qualify for. The FAFSA is necessary if you want to qualify for federal grants like the Pell Grant. If you meet the requirements, you’ll be offered any grants as part of your financial aid package.

Many schools also use the FAFSA as part of state grant programs. However, you might have to apply for state grants separately; it’s not always automatic. Speak with your college’s financial aid office to find out the requirements and deadlines for state grants, as well as if there’s extra paperwork.

Keep in mind that you must fill out the FAFSA each year to keep receiving grants. The FAFSA opens on October 1 every year, so fill it out as soon as possible to maintain your grant status as you go through school.

In general, grants don’t have to be repaid—but you have to uphold your end of the deal.

For example, if you get a grant and then drop out of school after you receive the funds, you might have to repay some of the money. Some grants come with specific conditions. For example, if you change your mind about teaching, or don’t fulfill the service requirements after finishing school, your TEACH Grant will revert to a student loan and you’ll have to make payments.

Grants are generally not treated as taxable income. If you receive a grant to pay for tuition, fees, books, and other necessary costs related to attending school, you normally won’t be taxed on those funds.

But in some cases—if you have a fellowship grant and receive a stipend for teaching, or if you’re working on a research grant—the money you receive might be considered taxable income.

Check with a tax professional to determine whether you need to include grant income with your gross income for tax purposes.

College grants are part of the higher education funding puzzle. As you prepare to pay for college, fill out the FAFSA and check into state grants to see if you qualify. With the right grants, you can reduce what you pay for college and rely less on student loans.