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There are federal and state grants and loans for people who are struggling to make financial ends meet. While not exactly "free money," these taxpayer-funded programs connect individuals and families with resources to help pay for such expenses as utilities, groceries, college tuition and a down payment on a home.
Each program has its own set of qualifications, many of which are income-based. Having that information ready can make the application process go smoothly.
Free money from the government
Free money from the government took on a new meaning in 2020 and 2021, with the issuance of significant COVID relief. While much of the pandemic-related relief has ended for now, there are other day-to-day government programs available to those in need. But unlike the stimulus checks that were issued automatically during COVID, you'll have to seek out and apply for these financial boosts.
1. Get help with utility bills and groceries
Need help paying your heating or phone bill? These programs may be able to help:
The Low Income Home Energy Assistance Program helps low-income households cover heating and cooling costs. Grants are issued via states, which receive funding from the Department of Health and Human Services. Each state sets its own eligibility requirements, including income levels.
The Lifeline program offers discounted phone or internet service. You must meet certain eligibility requirements.
The Supplemental Nutrition Assistance Program, or SNAP, is for families who meet income requirements in their state. If approved, families receive benefits each month on an Electronic Benefits Transfer, or EBT, card, which works like a debit card that can be used in authorized stores.
2. Find money for child care
Child care is a major expense for many families. Annual costs for infant care range from just shy of $5,000 in Mississippi to more than $22,600 in Washington, D.C., according to the Economic Policy Institute, a nonprofit organization focused on low- and middle-income workers.
The Child Care and Development Fund can help ease the burden for low-income families. Administered by the U.S. Department of Health and Human Services, the fund gives states, territories and tribes money to distribute to families to help pay for child care. Grants are income-based and typically cover care for children under 13. Find the Child Care and Development Fund contact for your state.
3. Recover unclaimed money
Unclaimed money isn’t so much free as it is money owed to you. About 1 in 10 Americans have unclaimed money, according to the National Association of Unclaimed Property Administrators. What exactly counts as unclaimed money? It could be a long-forgotten deposit paid to a utility company, a lost savings bond, unclaimed life insurance benefits or an uncashed paycheck.
These unclaimed funds are turned over to the state when the owner can’t be located, often due to a clerical error or companies having an old address on file. Visit unclaimed.org, a site affiliated with the National Association of State Treasurers, to find out if you have money waiting to be claimed.
During the 2020 fiscal year, more than $2.8 billion in previously unclaimed property was returned to owners, with an average claim payment of about $1,600.
4. Get down payment assistance for a home
You want to buy a home but can’t afford a down payment. Enter state-based down payment assistance. These grants and loans help you cover the upfront costs of purchasing a home.
In Nevada, for example, prospective homeowners who qualify can pay a fee and receive a grant of up to 5% of their home loan value to put toward a down payment and closing costs. Help isn’t reserved for low-income borrowers. For government loans, Nevada’s grant program is available to those with an annual income below $105,000. Check whether you qualify.
See NerdWallet's guide to find down payment assistance programs in your state.
5. Find tax credits for health insurance
Individuals and families who buy medical coverage through the government's health insurance marketplace (HealthCare.gov) may qualify for a credit toward their insurance premiums. The premium tax credit can be paid directly to your insurance provider, lowering your monthly payments.
6. Apply for college grants
College grants, like the federal Pell Grant, can make it easier to pay for college. Students who are eligible for the Pell Grant could get up to $6,495 for the 2022-23 award year. The exact amount awarded is based on factors that include financial need, the cost of attendance and enrollment status. Students can apply for the Pell Grant by completing the Free Application for Federal Student Aid, or FAFSA. The application is also used to qualify for many state and institutional grants and scholarships.
Other federal grants for college include:
The Federal Supplemental Educational Opportunity Grant.
The Teacher Education Assistance for College and Higher Education Grant.
The Iraq and Afghanistan Service Grant.
Watch out for scams
While there are ways to get financial assistance from the government, there are also grant scams that claim to give you free money from the government in hopes of stealing from you. Don’t be fooled. The government rarely reaches out to people with offers of free money, especially for starting a new business or covering personal expenses, and when it does, it’s never via social media. The goal of state and federal programs is to get people and families in need on their feet and on their way to financial independence.