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Pell Grants are a type of post-secondary educational federal grant sponsored by the US Department of Education. Pell Grants are constitutional because they are covered by a law titled the Higher Education Act of 1965. Pell Grants, originally known as the Basic Educational Opportunity Grant Program, are awarded on a formula based on financial need. This formula is determined by Congress using the criteria set forth by Congress on the Free Application for Federal Student Submissions (FAFSA).
Federal Pell Grants are awarded to graduate students who do not have a graduate or professional degree. The amount of money you can receive under federal Pell grants is based on your need, the cost of attendance at your school for both part-time and full-time students. The US Department of Education has a standard formula for determining whether someone is eligible for a Pell grant.
In the United States, federal loans are authorized under Title IV of the Higher Education Act. They may be subsidized by the US government based on the financial need of the student. Both subsidized and non-subsidized loans are guaranteed by the US Department of Education. Almost all students are eligible to receive them. Subsidized federal loans are given to those who come in with demonstrated financial need. The federal government pays the interest for these while the students are in college. On the other hand, non-subsidized federal loans are also guaranteed by the US government, but the government does not pay the interest on these loans to the students, rather the interest accrues on the loans. Interest begins accruing on $12,000. There are basically two distribution channels for federal student loans, i.e. Federal Direct Student Loans and Federal Family Education Loans.
Federal Direct Student Loans are funded with public capital originating from the US Treasury. The FDLP is distributed through a channel starting with the US Treasury Department, going to the US Department of Education and going to students going through college or university.
Federal family education loan programs are funded with private capital that comes from banking institutions. Through these loans, students are able to avail payment options such as discounts for automatic payments or a series of timely payments.
Private student loans are not funded or guaranteed by government agencies, but advocates of private student loans suggest that they combine the best elements of various government loans.
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