Students who attend college for at least three years can receive a $6 billion scholarship, the Department of Education announced Thursday.
The scholarship, announced at the start of the school year, is part of a $4.4 billion investment in higher education.
The announcement follows a year-long effort to address a $1.3 trillion student loan crisis.
The Education Department said the new fund will help students who qualify, and it will not cover the costs of student loans.
The federal government will cover the cost of tuition and fees for all students who graduate with a bachelor’s degree.
There will be more than 8 million students with federal loans and more than 2 million with private student loans, the department said.
The total is expected to be $16.2 trillion.
The new scholarship will help more than 3 million students, including about 700,000 who graduate and work in the private sector.
“We want to provide financial help to students who need it the most,” Education Secretary Betsy DeVos said in a statement.
About 20 percent of students who complete their college education with loans will need help with debt, according to the department.
It will be up to the states to decide how to distribute the funds, which are earmarked for state colleges and universities.
President Donald Trump has been trying to expand the education sector for years.
His goal is to give students a college education at a lower cost than private colleges and encourage them to stay in school.
Education Secretary Betsy Pence has said that the new scholarships are meant to be temporary and that it is up to states to determine how to allocate the funds.