6 Ways to Get Free Money From the Government

Personal Finance
6 Ways to Get Free Money From the Government

Whoever said “nothing in life comes free” didn’t take into account the myriad government programs that help people pay for things like college, day care and a new home. Most of these programs are funded by taxes, so technically you pay something for them, but they’re as close as you’ll get to getting free money from the government.

1. Recover unclaimed money

This isn’t so much free money as it is money owed to you. 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 2017 fiscal year, West Virginia doled out more than $12 million in unclaimed funds. Maine returned more than $18 million and Florida returned more than $313 million — a record for both states.

2. Get down payment assistance

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 can qualify for a grant of up to 5% of their mortgage to put toward a down payment and closing costs. District of Columbia residents can qualify for a down payment assistance loan of up to 3.5% of their mortgage. The loan needs to be repaid only if you sell, refinance or vacate the property within the first five years.

Help isn’t reserved for low-income borrowers. Nevada’s grant program is available to those with an annual income below $98,500. The D.C. program caps income eligibility at just over $132,000. 

3. Find help with child care

Day 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.)

4. Apply for college grants

The cost of higher education continues to rise; Pell Grants can help. Students who are eligible could get up to $5,920 in Pell Grants for the 2017-18 award year, which ends June 30, 2018. The exact amount awarded is based on factors that include financial need, the cost of attendance and whether you’re enrolled as a full-time or part-time student. Students can apply for the grant by completing the Free Application for Federal Student Aid.

5. Get tax credits for health insurance

The future of the Affordable Care Act is murky at best. But for now, the premium tax credits issued via the program are alive and well. Here’s how they work:

Individuals and families who buy coverage through the government’s health insurance marketplace (Healthcare.gov) can qualify for a credit toward their insurance premiums. The credit can be paid directly to your insurance provider, lowering your monthly payments, or paid out as a tax credit when you file your return.

6. Seek help with utility bills

Need help paying your heating bill? The Low Income Home Energy Assistance Program may be able to help.

As the name indicates, the 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.

You can also get help with your phone bill via the Lifeline program, which offers discounted landline or cell phone service. Lifeline is an income-based program, so you must meet certain eligibility requirements.

Watch out for scams

While there are a number of ways to get free money from the government, there are also 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, and when it does, it’s never via social media.

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Kelsey Sheehy is a staff writer at NerdWallet, a personal finance website. Email: ksheehy@nerdwallet.com. Twitter: @KelseyLSheehy.