The government is the best place to turn if you need money you don’t have to repay.
However, the federal government claims that they do not provide grants to individuals for personal use.
Both statements can be true if you consider three different perspectives.
- You do not need to repay some government-backed loans if you meet certain conditions.
- Federal departments send grants to state agencies, and these agencies offer free benefits to reduce household bills.
- Some federal departments give money directly to individuals, and these recipients can cover household expenses.
Loans You Don’t Pay Back
Loans become grants if you do not have to repay them. However, only some people qualify for these government-backed programs under certain conditions.
Here is a list of such loans and their parameters.
2nd Mortgages
Down payment assistance programs are second mortgages you do not repay until you sell the property. The government insures these loans to protect lenders.
The Federal Housing Authority publishes a list of second mortgages with payments that are forgiven, deferred, or subsidized until resale.
Down payment assistance programs make mortgages more affordable for first-time home buyers. They become grants if you stay in the house for life.
Student Loans
Many college graduates do not repay student loans if they work in specific fields or attend certain schools. Keep this in mind when choosing your major.
The Department of Education website states,” In certain situations, you can have your federal student loans forgiven, canceled, or discharged.”
- If you are a teacher
- If you are a government employee
- If you work for a non-profit
- If you are a nurse, doctor, or medical professional
- If you have a disability
- If your school has closed
- If your school misled you
FSA Loans
A Flexible Spending Account (FSA) is not a loan but can act like one for medical and dental expenses. If you leave your job, you do not have to repay the money your employer advanced.
An FSA can act like medical financing if you follow these steps.
- You can choose up to the annual FSA maximum $3,300 contribution during the annual open enrollment at work, usually in November or December.
- Schedule your procedure at the start of the FSA plan year, usually January 1.
- Pay the provider with your FSA debit card.
- Your employer must immediately reimburse qualifying expenses, even if you haven’t contributed yet.
Under IRS rules, your FSA payroll contributions stop if you leave your job. Your employer cannot reclaim the money they have already reimbursed.
Reverse Mortgage
A reverse mortgage can seem like a loan you don’t have to repay in the usual way. Still, it’s vital to understand the details. You are postponing repayment indefinitely.
Seniors over 62 can use a reverse mortgage to convert their home equity into cash. Unlike a regular loan, you don’t make monthly payments to the lender. The balance doesn’t become due until certain events occur, primarily:
- The borrower dies.
- The borrower sells the home.
- The borrower no longer lives in the home as their primary residence.
Government Benefits For Bills
Government benefits are free because you do not repay them. Federal agencies provide grants to states to fund programs that lower household bills.
Apply for benefits at the state agency. Below is a partial list.
Housing Bills
Low-income families can use government benefits to pay rent. The Department of Housing & Development (HUD) sends grant money to state agencies for the Section 8 Housing Choice Voucher Program.
Section 8 vouchers subsidize monthly rental charges for qualifying families. Tenants typically pay around 30% of their adjusted monthly income towards rent, with the vouchers covering the remaining amount.
Apply for Section 8 vouchers at your local Public Housing Agency.
Grocery Bills
Low-income families can use government benefits to pay grocery bills. The Department of Agriculture sends grant money to state agencies administering the Supplemental Nutrition Assistance Program (SNAP or Food Stamps).
SNAP provides nutrition benefits to help needy families buy healthy food at grocery stores. To access SNAP, use your Electronic Benefits Transfer (EBT) card at the register.
Apply for SNAP benefits at your local state agency.
Energy Bills
Many families can use government benefits to pay electric and gas bills. The Department of Health and Human Services (DHHS) sends grant money to state agencies running the Low-Income Home Energy Assistance Program (LIHEAP).
LIHEAP helps low-income families lower home energy costs, such as heating and cooling bills. It also supports weatherization and energy-related repairs, increasing home energy efficiency and safety.
Apply for LIHEAP benefits at your local state agency.
Medical Bills
Many people can get government benefits to pay medical bills. Two federal departments help make health insurance affordable.
- The Centers for Medicare & Medicaid Services sends grants to each state supporting health insurance benefits for low-income families.
- The Internal Revenue Service administers premium subsidies, making health insurance more affordable for moderate-income households.
Apply for Medicaid or insurance premium subsidies at Healthcare.gov.
Repair Bills
Low-income families may qualify for government benefits to lower home-repair bills. The Department of Energy sends grants to states to support the Weatherization Assistance Program (WAP).
WAP helps households reduce their gas and electricity costs by improving their homes’ energy efficiency. It achieves this by providing services like insulation, air sealing, and heating system repairs or replacements.
Apply for WAP home repair benefits by contacting your state agency.
Water Bills
Families can use government benefits to lower water and sewer bills. The Department of Health and Human Services sends grants to state agencies administering the Low-Income Household Water Assistance Program (LIHWAP).
LIHWAP provides financial assistance to low-income households to help them pay their water and wastewater bills. It focuses on past-due bills or arrears to prevent the disconnection of essential water services.
Apply for LIHWAP benefits at a local state agency.
Childcare Bills
Parents can use government benefits to lower childcare bills. The Office of Child Care (OCC) sends grant money to state agencies overseeing childcare assistance programs.
Childcare assistance programs provide subsidies to low-income families to help them earn more. These programs enable parents to work or attend training or education programs while ensuring their children can access safe and quality care.
Apply for childcare assistance at a local state agency.
Government Grant Money
The government claims it does not provide grants to individuals for personal use. Federal agencies send grants to states, universities, and non-profits to foster the public good.
However, that statement is only partially true. Several federal agencies provide free money directly to household members. Below is a list of examples.
Refundable Credits
The Internal Revenue Service (IRS) provides money to individuals through refundable tax credits. A refundable tax credit can result in a federal tax refund that exceeds the taxes you owe.
Recipients can use the money for personal needs.
Low-Income
The Earned Income Tax Credit (EITC) helps low and moderate-income workers and families get a tax break. The IRS might send you over $6,000, even if you pay no income taxes.
Claim the EITC if you qualify based on income and household size.
Parents
The Child Tax Credit (CTC) helps families with qualifying children get a tax break. The IRS might send you a check for $2,000 for each dependent under 17, even if you pay no income taxes.
The per-dependent amount drops to $1,000 after the 2025 tax year.
Claim the CTC if you qualify based on income and child age.
Students
The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses for an eligible student in the first four years of higher education. The IRS might send you a check for $2,500 per eligible student, even if you pay no income taxes.
Claim the AOTC if you qualify based on credit hours earned.
Temporary Assistance
The federal government provides block grants to states to fund the Temporary Assistance for Needy Families (TANF) program. TANF provides cash payments and services to help families become economically stable.
TANF recipients can use the money for personal needs like food, housing, and other living expenses. Benefits include childcare support and job training services.
Apply for TANF at a state or tribal agency as listed on the Office of Family Assistance website.
Pell Grants
Federal Pell Grants provide money to undergraduate students with exceptional financial needs to attend college. The Department of Education might send your school a check for around $7,000.
Apply for a Pell Grant by completing the Free Application for Federal Student Aid (FAFSA®) form. The maximum amount you can get is about $7,000, but it could be less depending on several factors.
- Your Expected Family Contribution
- The cost of attendance as determined by your school
- Your status as a full-time or part-time student
- Your plans to attend for a full academic year or less
