Pell Grants: Elevate Your Education Without Debt
A Pell Grant is a form of need-based federal aid for students in college or other post-secondary education. In contrast to student loans, Pell Grants generally do not need to be repaid, offering a significant benefit to those who qualify.
Key Takeaways
- Pell Grants are awarded based on financial need and, unlike loans, typically don’t have to be repaid.
- Applicants must complete a Free Application for Federal Student Aid (FAFSA) every year in order to qualify.
- The school determines how much Pell Grant money (if any) a student may receive, up to the federal maximum.
How a Pell Grant Works
To be eligible for a Pell Grant, students and their parents must fill out the government’s Free Application for Federal Student Aid (FAFSA).
The application, which can be completed online, asks a series of questions about the student’s and parents’ finances, in addition to other relevant information, such as whether any of the student’s siblings will also be in college simultaneously. Schools that the student applies to will receive an electronic copy of the application.
Financial aid officers at those schools use the FAFSA to determine how much federal aid to offer the student. The school’s calculations consider the difference between the Expected Family Contribution (EFC) and that school’s Cost of Attendance (COA).
- Expected Family Contribution (EFC) is based on the student’s and family’s income and assets.
- Cost of Attendance (COA) includes the school’s tuition and fees, room and board, books, and other expenses. Most schools publish their COA on their websites.
To bridge the gap between the EFC and the COA, the school may offer the student a combination of Pell Grants, subsidized and unsubsidized federal loans, and paid work-study jobs. Pell Grants and subsidized loans are aimed at students with “exceptional financial need,” while unsubsidized loans are available to students and parents regardless of financial status. Colleges typically make these financial aid offers around the same time that they send acceptance letters.
Only undergraduate students generally qualify for Pell Grants, with an exception for some post-baccalaureate teacher training programs. For the 2023–24 award year, the confusing term Expected Family Contribution (EFC) has been renamed to the Student Aid Index (SAI) to better align with its purpose. This doesn’t mean how much the student and their family must pay the college, but rather how much aid the applicant is eligible to receive.
Maximum Pell Grants and Limits
The maximum annual Pell Grant for the 2023–2024 school year is $7,395. There is also a lifetime limit of 12 terms (approximately six years of funding) in place. You can keep track of your Lifetime Eligibility Used (LEU) percentage while you are receiving Pell Grants, via your My Aid account on the Department of Education’s Federal Student Aid website.
Exploring Other Federal Grants for Education
While the Pell Grant is the primary form of federal financial aid for higher education, the government also funds several other aid programs.
Federal Supplemental Educational Opportunity Grants (FSEOG)
Like Pell Grants, FSEOGs are intended for students with extreme financial need as determined through the FAFSA. The awards range from as little as $100 to as much as $4,000 a year. They are not available at every school, and those that do offer them may have limited funds for these grants.
Teacher Education Access for College and Higher Education (TEACH) Grants
These grants are for students planning to teach high-need subjects, such as math, science, foreign languages, and special education in low-income areas. Worth up to $4,000 per year, TEACH grants have specific service requirements; failing to meet these converts the grant into a direct federal unsubsidized loan that must be repaid.
Iraq and Afghanistan Service Grants
These grants are designed for students who lost a parent or guardian serving in the U.S. armed forces post-9/11 and do not qualify for a Pell Grant. To be eligible, the student must have been under 24 years old or enrolled in college at least part-time at the time of the parent’s or guardian’s death. The grant maximum is based on that year’s maximum Pell Grant but reduced by 5.7% due to the Budget Control Act of 2011.
Maintaining Eligibility for Pell Grants
To continue receiving Pell Grants or other federal financial aid, students and their parents must fill out a new FAFSA each year. Students must also show “satisfactory academic progress” toward their degree or educational goal. This progress is defined by the school and typically involves maintaining a minimum GPA, a set number of credits, or other requirements. Failure to meet these terms or defaulting on a student loan can temporarily affect your eligibility for Pell Grants.
What Happens to Unused Pell Grant Money?
Generally, any money from your Pell Grant and other aid first goes towards your tuition, fees, and room and board. If there is any leftover money in your account, often referred to as a “credit balance,” your school must pay it to you within 14 days unless you have authorized the school to apply it toward future bills. These funds are typically disbursed each term or at least twice a year.
Do You Have to Pay Back Pell Grants?
Pell Grants, like scholarships, generally do not need to be repaid. However, there are circumstances where repayment may be required, such as withdrawing from the program, changing from full-time to part-time attendance, or receiving other aid that reduces your eligibility for federal funding. If any changes occur, your school should inform you of how much you owe and the process to repay it.
Who Was Pell?
Pell Grants are named in honor of the late U.S. Senator Claiborne de Borda Pell of Rhode Island, who championed them as a vital tool to help lower-income students achieve their educational goals.
The Bottom Line
Pell Grants can significantly assist undergraduate students with substantial financial needs in pursuing their college or post-secondary education goals. Unlike student loans, Pell Grants do not need to be repaid under most conditions. To apply, submit the Free Application for Federal Student Aid (FAFSA) each year to determine eligibility. Empower your educational journey without the burden of debt.
Related Terms: FAFSA, Expected Family Contribution, Cost of Attendance, Federal Aid, Subsidized Loans, Unsubsidized Loans.
References
- Federal Student Aid. “Complete the FAFSA Form”.
- Federal Student Aid. “How Financial Aid Works”.
- Federal Student Aid. “The U.S. Department of Education Offers Low-Interest Loans to Eligible Students to Help Cover the Cost of College or Career School”.
- Federal Student Aid. “Federal Pell Grants Are Usually Awarded Only to Undergraduate Students”.
- Federal Student Aid. “Federal Pell Grants Are Usually Awarded Only to Undergraduate Students”.
- Federal Student Aid. “Wondering How the Amount of Your Federal Student Aid Is Determined?”
- Federal Student Aid. “Did You Know There’s a Maximum Amount of Federal Pell Grant Funds You Can Receive Over Your Lifetime?”
- Federal Student Aid. “A Federal Supplemental Educational Opportunity Grant (FSEOG) Is a Grant for Undergraduate Students With Exceptional Financial Need”.
- Federal Student Aid. “A TEACH Grant Can Help You Pay for College if You Plan to Become a Teacher in a High-Need Field in a Low-Income Area”.
- Federal Student Aid. “A TEACH Grant Can Help You Pay for College if You Plan to Become a Teacher in a High-Need Field in a Low-Income Area”.
- Federal Student Aid. “If Your Parent or Guardian Died as a Result of Military Service in Iraq or Afghanistan, You May Be Eligible for an Iraq and AfghanistanService Grant”.
- Federal Student Aid. “If Your Parent or Guardian Died as a Result of Military Service in Iraq or Afghanistan, You May Be Eligible for an Iraq and Afghanistan Service Grant”.
- Federal Student Aid. “Don’t Get Discouraged If You’re in Default on Your Federal Student Loan”.
- Federal Student Aid. “Staying Eligible”.
- Federal Student Aid. “When You’ll Receive Your Financial Aid”.
- Federal Student Aid. “Federal Grants Are Money to Help Pay for College or Career School”.
- Salve Regina University, Pell Center for International Relations and Public Policy. “About Senator Pell”.
- Federal Student Aid. “Complete the FAFSA Form”.
- Federal Student Aid. “Federal Pell Grants Are Usually Awarded Only to Undergraduate Students”.
