Government Grants for Personal Debt

It's hard to escape television and Internet ads representing federal grants as a magic solution to your personal debt problems. The companies behind the pitch convince you that digging yourself out of debt is as easy as calling a toll-free number or purchasing an inexpensive grant list. However, according to the Federal Citizen Information Center (FCIC), these ads are misleading -- and they can even get you even deeper into debt.

Grants Defined

To understand why government grants cannot be used for personal debt, it's essential to first know why these grants exist -- and who gets them. According to Grants.gov, a federal grant is a monetary award from one of numerous federal agencies to a designated recipient to carry out a purpose for the greater public good. Federal grants are not loans, benefits or entitlements; the federal government does not offer individuals "free money" to pay off debt or compensate them for personal living expenses.

Who Gets Grants

Most recipients of federal grants are entities such as universities, research organizations, cities, counties, states and nonprofit organizations. Federal grants for individuals exist for very limited purposes. For example, during the 2009 through 2012 fiscal years, the U.S. Department of Agriculture is offering financial compensation at a rate of 50 percent for farmers of durum wheat to apply to the cost of a fungicide that protects crops against wheat scab.

FTC Intervention

Advertisements asserting that "free government money" is yours for the taking are typically indicative of a scam. In November 2010, the Federal Trade Commission announced that it reached a $9 million settlement after filing suit against an Internet operation that purported to provide information about federal grants for personal debt for only $1.99. Once consumers parted ways with their credit or debit card numbers, their accounts were subsequently charged $72 to $95 a month. The defendant, In Deep Services, Inc., which did business as "Grant$ For You Now," was forced to close up shop in June 2009.

Handling Debt

If you find it difficult or impossible to make ends meet, your best bet is to access GovBenefits.gov and see if you qualify for financial assistance from the state or government, says the FCIC. However, if personal debt is your problem, consider scheduling an appointment at a non-profit credit counseling agency. Your credit counselor may suggest a debt-management plan -- a structured, comprehensive program managed by the credit counseling agency to pay back your creditors.