What Is a Pell Grant? Your Complete Guide
It’s no secret that the cost of higher education is extremely prohibitive. College costs rival (and sometimes even surpass) other enormous life costs, like buying a home. Tuition costs have skyrocketed over the past 20 years, and they continue to climb year over year. For many, financial assistance is the only avenue to reaching higher education.
Before enrolling at any university, it’s imperative you estimate the cost of attendance for the duration of your chosen program so that you know how much aid you’ll need in advance. This cost includes more than just tuition.
You’ll also need to consider fees, room and board, meals, textbooks, transportation, and any other costs you may encounter on the way. When you have a clear picture of the amount of aid you need, you’re able to lay out a plan to attain that aid.
If you’re eligible for federal financial aid, the first aid you’ll likely receive will be a Pell Grant.
What Is a Pell Grant?
A Pell Grant is scholarship money supplied by the federal government. To put it another way, a Pell Grant is a federal grant for low-income students to pay for higher education. It’s a grant, not a loan, so it doesn’t need to be repaid (with a few exceptions).
Pell Grants are extremely common. In the 2020-21 school year, nearly 30% of all US undergraduate students had been approved for some amount of Pell Grant assistance.
The History of the Pell Grant
Pell Grants, originally called Opportunity Grants or Basic Grants, were established by Rhode Island senator Claiborne Pell in 1972 as an amendment to the Higher Education Act of 1965. Every five to six years, the program is reassessed and reinstated by congress.
Though Pell Grants have undergone a handful of changes since the early ‘70s, their function and effectiveness have remained largely unchanged for the majority of American students.
Some such changes include revoking then reinstating privileges for incarcerated or previously incarcerated students, increasing and decreasing the maximum award amount, and shortening the application process
For many, the Pell Grant is only the beginning of the financial aid needed to make college a reality. Most Pell Grant recipients do not receive the maximum award amount, but being eligible for any award amount of Pell Grant is the first step to eligibility for numerous other financial aid awards — federal or not.
If you receive a Pell Grant, your university must notify you in writing. This writing must detail the amount of the award and the method by which you are to receive the award. The funds from the Pell Grant may be sent directly to your account at your university/college or sent to you directly as a check.
The frequency of the award will depend on the term structure of your university (semester, trimester, or quarter), but the grant will be awarded once per term. If your university has no defined terms, the default is twice per calendar year. The Pell Grant is offered year-round, so your eligibility and award will not be influenced by the season your term is in.
How Is a Pell Grant Different from Student Loans?
Since a Pell Grant is a Grant and not a Loan, it generally does not need to be repaid. Think of it as a scholarship fund. A student will only need to repay part of their Pell Grant if they do not complete the academic term for which the grant was awarded. Not completing a term may include medical leave or dropping out altogether.
If a full-time student reduces their course load to part-time, they may have to repay part of their grant as well. If you do need to repay any part of your grant, you will be notified in writing by your school. Then, you will have 45 days to either make the repayment or make a repayment agreement with your school.
The Federal Pell Grant program is need-based, whereas anyone can take out a student loan. Your FAFSA (Free Application for Federal Student Aid) is your application for a Pell Grant, and not everyone who applies is granted aid.
Unlike federal student loans, you may only receive a Pell Grant for one institution at a time. With a loan, you might be able to enroll at one school during the regular spring and fall semesters and a different school during the summer. With a Pell Grant, you can only be enrolled at one school at a time.
As you’ve probably heard, or perhaps even experienced yourself, America is currently facing a student loan debt crisis. For many current and former students, student loans are a necessary evil in order to afford school costs. They have extremely high-interest rates and are very difficult to pay off. Therefore, working to find scholarships in the form of grants, like Pell Grants, that don’t need to be repaid later can help lighten the burden of student loans.
How Much Aid Can a Pell Grant Provide?
The amount of aid offered varies from student to student based on a number of factors (like, an entire FAFSA worth of factors.) Broadly, the maximum Pell Grant award for the 2022-23 school year is $6,895. Last year, the national average Pell Grant award was $4,568, according to the US Department of Education.
Your award amount will depend on several factors. These include the cost of attendance in your specific program and your full-time or part-time status. Other influential factors can include your Expected Family Contribution (EFC) and whether you’ll be attending for a full academic year or less.
Cost of Attendance (COA)
Cost of attendance (COA) is determined by the financial aid staff at your university. This amount is determined on a case-by-case basis. It includes tuition, materials, room and board, costs of child care, and costs related to disability accommodation.
Expected Family Contribution (EFC)
Expected Family Contribution is a number that many students take issue with. After all, no family is the same as another, and what a student can reasonably “expect” their family to contribute is extremely personal.
Final Calculations
The EFC is calculated according to a formula established by law. The formula takes into account your family income (taxed and untaxed), assets, and government benefits. It also accounts for the size of your family and if any other family members will be in college at the same time. You can see exactly what the EFC Formula includes online.
In simplest terms, your financial need is your COA minus your EFC. The amount of need you have determines how much aid you’re eligible to receive. You can calculate how much aid you’ll receive, and this will be easiest if you have your completed FAFSA in front of you.
Further Benefits
Some students may qualify for Pell Grants that exceed the maximum award amount. If your parent died as a result of military service in Iraq or Afghanistan or in the line of duty as a public safety officer while you were under 24 years of age, you’re eligible for further grant benefits.
To be clear, you must be eligible to receive a Pell Grant independent of this criteria; this is an additional deduction. In some cases, meeting these criteria can result in the Department of Education calculating your financial need as if your family’s income were zero dollars per year, which would reduce your EFC to nothing.
If this criterion applies to you, but you’re not otherwise eligible for a Pell Grant, consider using the Iraq and Afghanistan Service Grant for your financial aid program needs instead.
Who Is Eligible for a Pell Grant?
Pell Grant eligibility is not universal. Students must personally meet a number of criteria to be eligible to receive a Pell Grant.
Enrollment
First, you must be enrolled, or accepted for enrollment, as a student in an eligible degree or certificate-seeking program. Both full-time students and part-time students can qualify, but full-time students typically receive greater aid. Prior to attaining this enrollment status, you must have completed high school with a diploma or GED equivalent. You must be a US citizen or an eligible non-citizen.
Federal Pell Grants are awarded to undergraduate students, not graduate students, like Masters students or Ph.D. candidates. If you have earned another bachelor's degree, professional degree, or any graduate degree in the past, you will not be eligible for a Pell Grant. The one exception to this rule is some graduate teacher certification programs.
Financial Need
To be eligible, students must display exceptional financial need. Exceptional financial need is defined as students with the lowest EFC at the university. Therefore, the threshold for exceptional need will vary from school to school. Students who receive grant money generally come from families with a family income of $50,000 or less. Of all the Grant Funds available, most go to students with a family income of less than $20,000 per year.
Award Terms
Eligible students may only receive a Pell Grant for a maximum of 12 award terms per life. For most semester-based programs, that’s six years of aid per person. However, you don’t just apply once and receive the aid automatically for all 12 terms.
You must prove your eligibility every year, or else you automatically lose the grant. You can check how much grant funding you’ve used and how much you have left for your lifetime (your “Lifetime Eligibility Usage”) with the National Student Loan Data System.
Academic Progress
In order to maintain their eligibility and their grant award, Pell Grant recipients have to follow a few rules. First, you have to stay enrolled in the eligible program. Then, you must fill out and submit a fresh FAFSA every single year. You must also make satisfactory academic progress toward that degree or certification.
In other words, you have to keep your grades up. Different schools have different GPA minimums for eligibility, so check with your financial aid office or registrar's office to determine your school’s minimum good-standing GPA for eligibility. After you’ve earned your first baccalaureate or professional degree, you are no longer eligible to receive a Pell Grant.
Can I Apply a Pell Grant Toward Any Academic Program?
The Pell Grant can only be applied to an eligible degree or certificate-seeking programs at accredited colleges, universities, or certificate programs. However, there are over 5,500 eligible institutions across the U.S., so the odds are good that the program you want to pursue is covered.
If you are unsure if your institution qualifies, contact the financial aid office of your institution.
How Can I Apply for a Pell Grant?
The first thing you need to do is submit your FAFSA. Your University’s tuition or registration office likely already requires this form for all students, so you may already have this step done. Look at you go!
You’ll have to submit a FAFSA for each relevant academic year in order to be eligible for any king of federal student aid, including Pell Grants. Many universities also use the FAFSA to award non-federal student aid as well, so it’s extremely important to keep your FAFSA up to date and turned in on time.
After you submit your FAFSA, you simply wait. Your FAFSA itself is your application. Your school’s financial aid office will notify you if you will receive any Pell Grant funds.
What Does Red Pocket Have To Do With Pell Grants?
Red Pocket was designed with budget-conscious consumers in mind. Your money should work for you, and one way to put those funds to work is in your tuition, but when tuition is so high, that can be hard to do. We believe so much that all students should be able to afford to pursue higher education that we want to help spread the word about federal student aid to our customers.
If you’re a student, you need to stay connected, but you don’t have the funds to waste on overpriced cell phone plans. You’re working hard to get that degree and working a job at the same time. Don’t waste time or money hunting down the best plan from the major US carriers when Red Pocket has the best savings for you front and center.
Sources:
Affordable Connectivity Program | Federal Communications Commission
Federal Pell Grants | Federal Student Aid
What Is a Pell Grant? – BigFuture | College Board
How Aid Is Calculated | Federal Student Aid
