The Pell grants is a type of post-secondary educational federal grant which is sponsored by the US Department of Education. The Pell grants are constitutional as they are covered by the legislation titled the Higher Education Act of 1965. Pell grants originally known as the Basic Educational opportunity Grant Program are awarded on formula based on financial need. This formula is determined by the congress using criteria submitted the Free Application for Federal Student (FAFSA).
Federal Pell grants are awarded to the undergraduate students who don’t have a bachelor or professional degree. The amount of money that you can receive under the federal Pell grant 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 to determine if one is eligible or not to get approved for Pell grants.
In the United States, the federal loans are authorized under the title IV of the Higher Education Act. They can be subsidized by the US government depending on the student’s financial need. Both subsidized and unsubsidized loans are guaranteed by the US Department of Education. Almost all the students are eligible to receive them. Subsidized federal loans are offered to the ones who come with a demonstrated financial need. Federal government makes interest payments for these students while the students remain in the college. Unsubsidized federal loans, on the other hand, are also guaranteed by the US government but on these loans the government does not pay interest for the students, rather 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 from public capital originating with the US Treasury. FDLP are distributed through a channel beginning with the US Treasury Department, goes to the U.S Department of Education and passing through the college or university goes to the students.
Federal Family Education Loan programs are funded with private capitals which come from banking institutions. Through these loans, students are able to take payment options like allowing a discount for automatic payments or a series of on time 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 different government loans into one.