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Home > Consumer Focus Archive > The Facts on Government Grants and Loans
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Consumer Focus: The Facts on Government Grants and Loans
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The Facts on Government Grants and Loans

We're all familiar with ads offering free money from the government. The federal government does offer grants and loans, but the information you pay for may be misleading. For complete and up-to-date information on these programs, go right to the source--the government.


Learn more about:

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Getting Started

First, there are some basic differences between grants and loans. You are required to pay back a loan, often with interest. You are not required to pay back a grant, but there are very few grants available to individuals. Most grants are awarded to universities, researchers, cities, states, counties, and non-profit organizations. Loans are generally the best bet for individuals. Some other handy tips to keep in mind:

  • Don't try to call the United States Department of Grants. There isn't one. Federal agencies may have different rules for who is eligible for grants and loans and how to apply.
  • To get an idea of all the federal grants available, browse the online Catalog of Federal Domestic Assistance. These listings are updated annually.
  • Be aware that grants require you to submit a proposal to the federal agency describing what you plan to do with the money. Even after submitting a proposal, it may be quite some time before the agency either approves or denies your request.
  • Grants also require you to fill out forms, generally on a quarterly basis, that tell how much money you have spent and what you have spent it on, as well as how you are progressing on the work you promised to do.
  • A better approach for most consumers is to visit GovBenefits.gov. You check off which categories you fit into (for example, veteran) and then answer a series of questions. GovBenefits will identify loans and sources of financial assistance for which you may be eligible and tell you how and where to apply. You may be surprised what you are eligible for- there are forms of assistance available for a variety of personal situations including disaster victims, farmers, or people with teaching experience.

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College Grants and Loans

  • You can fill out an application for Federal Student Aid by visiting the Department of Education's website. You may be asked to provide information about your income and your family's income to determine your eligibility. Save report cards and transcripts in case you need to report your grades. Have a good idea of what schools you plan to apply to and what you want to study.
  • Visit GovLoans.gov to learn more about well-known programs such as Pell Grants, Work-Study, and Perkins and Stafford Loans.
  • The Department of Veterans Affairs website can tell you more about the "GI Bill" and other programs for veterans and their survivors and dependents.
  • GovLoans.gov also has information about Parent Loans for Undergraduate Students (PLUS). Eligible parents can borrow to pay the educational expenses of dependent undergraduate children who are enrolled in school at least part-time.
  • Beware of "scholarship scams." For example, be wary when you hear that your bank account number is needed to "hold" the scholarship. Be sure the scholarship is legitimate before giving out any personal information.

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Home Buying

The Department of Housing and Urban Development (HUD) helps individuals by giving grants to non-profits and local governments, however HUD does not offer assistance directly to consumers. Visit or call the HUD office in your state to find out more.

Here are some HUD loans and other options to explore:

  • HUD's Federal Housing Administration (FHA) insures loans, allowing you to purchase a home for as little as 3% down. Anyone can apply, but there is a limit on the loan amount they will insure-this varies according to geographic area. You can also wrap the closing costs into your mortgage.
  • A foreclosed or "HUD Home" may have a lower asking price. Most HUD Homes are affordable for low to moderate income families.
  • Through the Department of Veterans Affairs, veterans and their families may be eligible for loans to buy a home.
  • The United States Department of Agriculture's Rural Housing Service insures loans for the purchase of homes in rural communities.
  • Fannie Mae has a website that can help you find a low cost mortgage and a lender that are right for you.

Rental Housing

  • Visit HUD's website to learn about programs to assist you in renting a house or apartment. You can locate low-income housing, or apply for a Section 8 voucher that you can use to pay some or all of your rent.
  • The Rural Housing Service makes financing available to elderly, disabled, or low-income apartment residents in rural areas to ensure they are able to make rent payments.

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Starting or Growing A Business

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Other Resources

This is just a brief overview. For more information on paying for college, buying a home, or starting a business, check out these resources:


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* Names of resources and organizations included in this online article are provided as examples only, and their inclusion does not mean that they are endorsed by the Federal Citizen Information Center or any other Government agency. Also, if a particular resource or organization is not mentioned, this does not mean or imply that it is unsatisfactory.

*If you click on these links, you are leaving FCIC's website. Please bookmark us before you leave so you can return easily. FCIC is not responsible for the content of these websites.

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