The government doles out billions in financial aid each year. Most comes from the U.S. Department of Education, Department of Health and Human Services, or Department of the Interior.

To qualify you must:

• Be a U.S. citizen or an eligible non-citizen
• Be enrolled or accepted into an eligible degree- or certificate-granting program
• Not be simultaneously enrolled in a postsecondary institution
• Have the ability to benefit from the course of study
• Have a valid Social Security number
• Determine if a Financial Aid Transcript is required at your school
• Sign a Statement of Educational Purpose (part of the FAFSA)
• Be registered with the Selective Service, if required
• Not have been convicted of a federal or state drug offense
• Not be in default on a previous federal loan
• Not have a federal lien against your property
• Not have an overaward in federal funding
• Not have been convicted of or pled guilty or no contest to a crime involving fraud in obtaining federal funds
• Not have been determined ineligible through borrower error for a FFELP loan already obtained
• If currently enrolled, student must maintain satisfactory academic progress
• Not be in a medical internship
• Not have fraudulently borrowed a loan
• Not be incarcerated at the time of disbursement

Not sure what’s what...or what you qualify for? Here’s a list of programs and a description of how each works.

Need-Based Programs

Federal Pell Grant
This is the largest grant program. More than 5 million students received awards last year. The program is limited to those who have not yet earned a bachelor’s or first-professional degree and provides portable grants that can be used at any school. The amount is based on need, up to $4,731 for 2008-09. Go to www.studentaid.ed.gov for more information.

New: Academic Competitiveness and SMART Grants
Two new programs were recently approved for qualifying recipients of Pell Grants. For incoming freshmen and sophomores who graduated high school in 2006 or 2005, respectively, there are Academic Competitiveness Grants. Recipients must have completed a rigorous high school curriculum and meet other requirements. Freshman awards are $750; sophomores receive $1,300. SMART Grants are available to juniors and seniors pursuing certain areas of study, including math, engineering, and critical foreign languages. Awards are in the amount of $4,000.

The new programs are approved through the 2010-11 school year.

Federal Supplemental Educational Opportunity Grant (FSEOG)
These grants are for students with exceptional need who have not yet earned a bachelor’s or first-professional degree, and can range from $100 to $4,000. This is a campus-based program; the amount awarded depends on available funds at each participating school, the college's policy, the total tuition cost, and the amount of other aid awarded. Priority is given to Pell Grant recipients with the highest need.

Federal Perkins Loan
This low-interest loan program, the oldest administered by the U.S. Department of Education, is open to college, graduate, and professional students. The current interest rate is 5 percent. College students can borrow up to $4,000 per year, with a total not to exceed $20,000. Graduate and professional students can borrow up to $6,000 per year, to a total of $40,000 including college loans. Interest does not accrue while the borrower is enrolled at least half time and repayment begins nine months after graduation or after the borrower is no longer enrolled at least half time. Under certain conditions (e.g., teaching in a low-income school district, serving in the Peace Corps, etc.), the loan amount may be forgiven or reduced.

Federal Work-Study (FWS)
Both undergraduate and graduate students can qualify for Federal Work-Study (FWS) awards. The number of hours worked and wages earned vary from school to school, but students must be paid at least the minimum wage. The government pays about 75 percent of the wages and the school provides the rest. This award must be earned and is coordinated through the college financial aid office. Work can either be on or off campus, at the school's discretion.

Federal Stafford Loans (Subsidized)
Stafford loans are available from lenders to both undergraduate and graduate students who attend a school that participates in the Federal Family Education Loan (FFEL) Program. The interest is paid by the government while the borrower is in school and during a grace or deferment period. The  interest rate is fixed at 6.8 percent (or less in some cases).

William D. Ford Direct Stafford Loans (Subsidized)
This program is almost identical to the Federal Stafford Loan program, except the funds are from a different source and there are slightly different application and repayment processes. This loan is only available at schools that participate in the U.S. Department of Education's Direct Loan Program

Non-Need-Based Programs

Federal Stafford Loans (Unsubsidized)
Unsubsidized Stafford loans made under the FFEL Program provide assistance to undergraduate and graduate students who do not demonstrate need but could benefit from a low-interest loan. These loans are funded by lenders.  Students must either pay the interest as it accrues or repay it after leaving school. The interest rate is fixed at 6.8 percent. This loan may be used to replace the Expected Family Contribution.

William D. Ford Direct Loans (Unsubsidized)
This program is almost identical to the Federal Unsubsidized Stafford Loan program, except there are slightly different application and repayment processes.  The loans are funded by the U.S. Department of Education.

Federal PLUS Loans
This is a FFEL Program loan intended to help parents of undergraduate students finance their education. This loan program is also available to graduate and professional students. A parent or graduate/professional student cannot borrow more than the student's Cost of Attendance minus other financial assistance. The interest rate is fixed at 8.5 percent. Repayment begins 60 days after the money is advanced, and fees of up to four percent may be subtracted from the loan amount. There is a credit check.

PLUS Loans for Graduate and Professional Degrees
Graduate and professional degree students are now eligible to borrow under the PLUS program. The amount varies and is based upon cost of attendance and other aid received. It has a fixed rate of 8.5 percent in the FFEL and 7.9 percent in the Direct Loan programs. A credit check is performed and other restrictions may apply. For more information, click here.

Direct PLUS Loans
This program is almost identical to the Federal PLUS Loan, except there are slightly different application and repayment processes.  The interest rate is fixed at 7.9 percent.  The loans are funded by the U.S. Department of Education.