Need based grants are free monetary awards given to students by government or private foundations based on the extent to which they are needed. Simply speaking need based grants are designed to help students who need help in funding their education because their source of income or that of their parents is regarded as not enough.

A need based grant would not be available to a student whose family is regarded as well-to-do. The award of this kind of grant is often judged on the income of the family involved as well as the student, however some families earn too much to be classified as needy and earn too little to be quite able to fully fund the educational needs of their children. A large percentage of these "in-between" families have to resort to taking out huge loans to fund college expenses.

A few schools have recognized this and are currently making efforts to incorporate this class of families into the financial aid structure, but federal financial aid is still a long way from taking any such steps. The current financial aid system involves you filling out the free application for federal student aid (FAFSA) forms and the results are used to calculate the expected family contribution which determines the amount of financial aid a student will get. The expected family contribution is determined by subtracting basic living expenses and taxes from the family income.

Federal student aid applications have to be filed to cover the entire school year you're expecting to receive funding for. For example, if you're resuming school in the fall of 2010 your FAFSA application ought to cover the period from the first of January to the 11th of June 2011 since a school year would be starting in the summer of 2010.

Need based aid is simply based on the amount it costs to go to your choice of college minus your expected family contributions. If your expected family contribution is expected to be $10,000 and the costs of attending college is $18,000, your NEED contribution would be $8,000. The $8,000 is what the need package would be designed to cover. Each college has an estimated cost amount attached to it and this varies widely, the amount covers the costs of tuition, fees, books, boarding and other living expenses. Independent student financial contributions are judged by other criteria.

The financial aid office compiles all this data and comes up with a mix of possible aid features that could include grants, loans and student work opportunities all designed to offset the costs of attending college.

There are a number of government grants available to students with low incomes and low expected family contributions.

Here are some notable ones:

• Leveraging education assistance program (LEAP)
This is available to students seeking post high-school education. Sharing of the available funds are done on a yearly basis to states that apply, individual students can then apply to their states. Each state's share is based on the population of available student participants that it has. The available financial aid for 2009 was $161,556,000, and the average range of issued awards was $1000-$5000.

• Federal Pell Grant
This is available to low income undergraduate students in any of about 5,400 participating schools all over the United States. The amounts issued to individual students are based on the expected family contribution, the costs of attendance of the school enrolled in and the student's enrollment status i.e. either part-time or full time. A student applying for the Pell grant is required to file a free application for federal student aid, upon submission, the student will receive a student aid report or the school will receive an institutional student information record. These documents state if the student is eligible for the Pell grant or not.

If a student is eligible for the grant it will be paid directly to the student's school account or issued directly to the student by check. Students are paid once a semester or twice a year.

As of 2009, the amount of available for financial aid was $25,328,889,000. The average amount awarded was $3,611 and the range awarded was $486 to $5,350.

• Federal supplemental education opportunity grant (FSEOG)
This is also a need based grant available to low income earners and students with the lowest expected family contributions. A FAFSA is required from the student to determine how much the grant is needed. These forms are available in over 4,000 institutions that participate in the FSEOG program. The student is also required to be a U.S. citizen.

The grants issued are anywhere between $100 and $4,000. Most awardees of the FSEOG are usually also recipients of the federal Pell grant. Because of the high demand for need based grants and due to the fact that the FSEOG is issued on a first come first serve basis it is important to apply as soon as possible. A sum of $958,816,000 was available as of 2009, with an average amount of $762 issued.

You should check the individual websites for more details on application deadlines and guidelines for each program.