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Uncle Sam has the most money available for student financial aid. If you're undecided about whether or not to apply, think about this: Your tax dollars go to finance these programs, so if you are eligible, you are essentially tapping into a resource that you are helping to support.

Three major types of federal aid — grants, loans, and work-study — currently exist, each with its own requirements and merits. Eligibility requirements and amounts of assistance (and even the programs themselves) can change from year to year. Specific details about each type of assistance will be available from your college's financial aid office and also from the U.S. Department of Education.

Federal student grants

Federal grants come in two categories: the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG). Grants do not need to be repaid (unless you fail to continue to meet their criteria). They are usually disbursed to you through the college.

A Pell Grant is a needs-based grant, that is, one that takes into account your family's financial circumstances. The maximum Pell grant for the 2006-2007 award year is $4,050, although the amount awarded each year could change. Part-time and full-time students can apply (part-time students will receive less funding than full-time students).

Federal Supplemental Educational Opportunity Grants (FSEOG) are for undergraduate students with exceptional financial need. Priority is given to students who receive Pell grants. The FSEOG grant is administered directly by the college you attend, so you will need to be aware of the college's financial aid deadlines, which are often earlier than the federal government's, for aid that it administers directly.

Unlike the Pell grant, which the government guarantees to each college for each eligible student, each participating college only receives a certain amount of FSEOG funds. Once the money is gone, no more awards can be given for the year.

The number of students who receive an FSEOG will depend on the availability of funds at that school. You can receive between $100 and $4,000 depending on your need, the funding level of your college, and your college's financial aid policies. Your college may or may not participate in this program.

Federal Loans

Sometimes, you or your parents may need to borrow some money to supplement any grants, scholarships, or work-study opportunities available to you. Loans that are provided by or guaranteed by the federal government are among the best available because they offer low interest rates and flexible payment plans.

Interest rates on federal student loans are usually lower than those from commercial lenders, such as banks. Interest rates on these federal loans, however, are expected to go up 1.5 to 2.0 percent each year.

Remember that a loan, unlike a grant or scholarship, will need to be repaid — with interest and on time! You'll be paid directly by the college or credit will be applied to your account. Usually you'll receive at least two loan payments during the academic year.

Perkins Loans are available to students with exceptional financial need. In 2005-2006, undergraduate students could borrow up to $4,000 per year or a total of $20,000 under this program. There is no fee to take out this loan.  One of the better features of this loan is that the government pays the interest while you are in college and for nine months after you graduate. You start paying the loan back after nine months, or if and when you withdraw from school or drop below half-time status. (This loan program is in danger of being cut from the federal budget).

Stafford Loans come in two forms — subsidized and unsubsidized — and are available to part-time and full-time students. Maximum loan amounts vary based on whether you are considered a dependent or independent student and by your status in school (that is, freshman, sophomore). You may apply for and receive both types of loans at the same time.

• Subsidized Stafford Loans are based on financial need and have low interest rates. They are called subsidized loans because the federal government pays the interest on the loan while you are in college and for a six-month grace period after you graduate. These loans are available at selected colleges and universities and come directly from the federal government.
• Unsubsidized Stafford Loans ARE NOT based on financial need. You can pay off the interest that accrues on the loan while you are in college, or you can have the interest added onto the principal loan amount and repay it when you graduate. These loans are available through private lenders through the Federal Family Education Loan Program. Your college will be able to help you identify private lenders.

Stafford Loans require that you pay a fee of up to 4 percent of the loan. This fee is deducted from each loan disbursement, so you will receive slightly less than the amount you borrow.

Federal PLUS Loans

The Federal PLUS Loan program allows parents to borrow the full cost of attendance (an amount determined by the federal government) minus any aid received for dependent undergraduate students who are enrolled at least half-time in college. So if your cost of attendance is $3,000 and you're receiving $1,000 in other types of assistance, your parents could borrow $2,000.

Of course, you as the student must meet the general eligibility requirements for federal student aid. Your parents must also meet some criteria such as having a good credit history, must be citizens or eligible non-citizens, and not be in default on any federal student aid program. A co-signer might be necessary if their credit history is shaky.

Federal Work-Study Program

The goals of the Federal Work-Study Program are to help you earn money to pay for your educational expenses, promote community service, or engage you in work that is related to your course of study.

Under the Work-Study Program, you will hold a part-time job on campus at your college or off campus at a private not-for-profit organization, such as a local food bank, or a public agency, such as a government agency. Occasionally, placement may be with a for-profit employer, but usually your job must be related to your course of study.

You'll earn at least the current minimum wage, if not more, and will normally be paid by the hour directly by your college. The amount you earn cannot exceed the amount of your Federal Work-Study award, so you can't work an unlimited amount of hours. The amount of your award depends on when you apply, your level of financial need, and the funding level of your school.

Federal Work-Study is administered directly through your college so be sure to check out the college's deadlines for applying! There are usually more applicants than available jobs so apply early.