College financial aid can include grants, scholarships, work-study, and student loans. Families often focus on loans because they may fill a large portion of a college funding gap, but federal grants deserve attention first.
Unlike student loans, grants generally do not require repayment. They can reduce the amount a family must cover through savings, current income, or borrowing.
At True North Wealth Management, we help families compare college funding options within the larger financial plan. That means looking at financial aid, college savings, taxes, cash flow, student borrowing, and retirement security together.
Start With the FAFSA
Students must generally complete the Free Application for Federal Student Aid, commonly called the FAFSA, to qualify for federal student grants and other federal aid.
Colleges and career schools use FAFSA information to determine eligibility for aid that may include:
Federal grants
Federal student loans
Federal Work-Study
State financial aid
Institutional grants and scholarships
Submitting the FAFSA does not require a student to accept loans. It simply gives the school the information it needs to determine what aid may be available.
Families should complete the FAFSA even if they assume their income is too high to qualify. Some schools and scholarship programs use FAFSA information when awarding their own aid, and eligibility can depend on more than income alone.
Grants Usually Do Not Require Repayment
Federal grants generally provide education funding that students do not need to repay.
However, repayment may be required in certain situations. For example, a student may have to return part of a grant if the student:
Withdraws early from school
Changes enrollment status
Receives aid from another source that changes eligibility
Does not complete a TEACH Grant service obligation
Received funds for which the student was not eligible
Students should speak with the school’s financial aid office before withdrawing, dropping classes, or making another enrollment change.
Federal Pell Grants
Federal Pell Grants primarily serve undergraduate students with substantial financial need who have not yet earned a bachelor’s, graduate, or professional degree.
For the 2026–27 award year, the maximum Federal Pell Grant is $7,395.
The actual amount a student receives may depend on:
Financial need
Cost of attendance
Enrollment intensity
Length of the academic year
Lifetime Pell Grant eligibility already used
Not every eligible student receives the maximum award. After processing the FAFSA, the school calculates the student’s eligibility and includes the Pell Grant in the financial aid offer.
Federal Supplemental Educational Opportunity Grants
The Federal Supplemental Educational Opportunity Grant, or FSEOG, provides additional need-based aid to eligible undergraduate students.
Awards generally range from $100 to $4,000 per year, depending on:
The student’s financial need
When the student applies
The amount of other financial aid received
The funds available at the school
Schools generally give priority to students with exceptional financial need, particularly students who also qualify for Pell Grants.
Not every college participates in the FSEOG program, and participating schools receive a limited amount of funding. Once the school awards all available funds, additional eligible students may not receive an award.
That makes early FAFSA submission especially important.
TEACH Grants
The Teacher Education Assistance for College and Higher Education Grant, commonly called the TEACH Grant, supports eligible students who plan to teach in high-need fields.
TEACH Grants may provide up to $4,000 per year before any federally required award reductions. Actual disbursement amounts may be lower.
Unlike most federal grants, a TEACH Grant comes with a service obligation. Recipients generally agree to:
Complete an eligible teacher preparation program
Teach in a high-need field
Work at a qualifying low-income school or educational service agency
Complete at least four academic years of qualifying teaching
Complete the service within the required period
Provide documentation showing that they met the requirements
Students must also complete required TEACH Grant counseling and sign an Agreement to Serve or Repay.
If the recipient does not complete the service obligation, the TEACH Grants may convert to Direct Unsubsidized Loans. The recipient must then repay the converted amount with interest calculated under program rules.
Students should review the commitment carefully before accepting a TEACH Grant.
Compare Grants With Scholarships and Loans
A financial aid offer may include several different types of assistance. Families should not treat them as equal.
Grants and Scholarships
Grants and scholarships generally reduce college costs without requiring repayment, assuming the student meets all conditions.
Work-Study
Federal Work-Study allows eligible students to earn money through qualifying employment. The student receives the money through work rather than as an upfront reduction in the college bill.
Student Loans
Federal and private student loans must generally be repaid with interest. The student or parent should understand the borrower, interest rate, fees, repayment terms, and projected monthly payment before accepting a loan.
When comparing financial aid offers, separate gift aid from earned aid and borrowed aid.
Review the Entire Financial Aid Offer
A school may describe a financial aid package as generous even when much of it consists of loans.
For each school, identify:
Total cost of attendance
Federal grants
State and institutional grants
Scholarships
Work-study
Federal student loans
Parent loans
Remaining family contribution
A useful calculation is:
Cost of attendance minus grants and scholarships equals estimated net cost.
Then determine how the family will cover that net cost without assuming every loan listed in the offer is affordable.
Meet Every Deadline
Federal, state, school, and scholarship deadlines may differ.
The federal FAFSA deadline may be later than a school’s priority deadline. Waiting too long could reduce access to limited funds such as FSEOG or institutional aid.
Families should track:
FAFSA availability and deadlines
State aid deadlines
College priority deadlines
Scholarship applications
Verification requests
Financial aid appeal deadlines
Enrollment and housing deposits
Submitting the FAFSA is only the first step. Students should monitor their StudentAid.gov account and school portal for requests or corrections.
Keep the FAFSA Accurate and Complete
Depending on the student’s dependency status, the FAFSA may require information and consent from one or more contributors, such as a parent or spouse.
Each required contributor may need their own StudentAid.gov account. Providing information does not automatically make a parent responsible for paying the student’s college costs or borrowing money.
Before submitting, review:
Names and Social Security numbers
Marital status
Household information
Income and tax information
School selections
Contributor invitations
Required signatures and consent
Incomplete or inconsistent information can delay financial aid processing.
Ask for a Financial Aid Review When Circumstances Change
The FAFSA may not fully reflect a family’s current situation.
A family may experience:
Job loss
Reduced income
Divorce or separation
Death of a parent
Large medical expenses
Loss of benefits
Natural disaster losses
Other significant financial changes
In those situations, contact the school’s financial aid office and ask whether it can review special circumstances. The school may request supporting documentation and decide whether an adjustment is appropriate.
Federal Grants and Your College Funding Plan
Federal grants can lower the cost of education, but they may cover only part of the total bill.
Families may still need to coordinate:
529 plan withdrawals
Scholarships
Current income
Student earnings
Tax credits
Family savings
Reasonable student borrowing
Grandparent contributions
School selection and cost comparisons
At True North Wealth Management, we help families evaluate these choices without losing sight of retirement, taxes, and long-term financial security.
Apply Before Assuming You Will Not Qualify
The FAFSA is free to submit, and completing it may open the door to federal, state, school, and scholarship aid.
If your family is preparing for college or career school, schedule a conversation with True North Wealth Management.
A thoughtful college funding review can help you estimate costs, compare financial aid, reduce unnecessary borrowing, and build an education strategy that supports both your child’s future and your own.
Important Disclosures:
This material is for informational purposes only and is not intended as tax, legal, accounting, education, financial aid, or individualized financial advice. Federal grant amounts, FAFSA requirements, eligibility rules, service obligations, deadlines, and repayment requirements may change. A school’s financial aid office makes final eligibility and award decisions. Please consult Federal Student Aid, the applicable school, and qualified tax, legal, financial aid, and financial professionals regarding your circumstances.
1. NCAN.org, 2025
2. StudentAid.gov, 2025
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite and customized by True North Wealth Management LLC to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.