What Is a Federal Pell Grant?

Paying for college is daunting — even if you can afford it. But what happens if you can’t? Pursuing postsecondary education is a “must” for many, regardless of socioeconomic status, as it should be. One of the resources to help is the Pell Grant. This need-based grant awarded by the U.S. Department of Education helps low-income students pay for college costs, such as tuition, fees, room and board.?

By Helen Harris

As you begin your college search and application process, one of the big factors that comes into play is how you are going to pay the hefty price for such an expensive undergraduate degree program.?

You value your higher education but want to know what your options are for assistance.

You may be applying for scholarships, but you may also want to consider the Federal Pell Grant.?

What Is the Impact of the Pell Grant??

As explained by Federal Student Aid, The Pell Grant is the largest federal grant program offered to undergraduates, and its purpose is to assist students from low-income households.?

DeVon Hunt , a higher education consultant, explains that a major benefit of the Federal Pell Grant is that it does not have to be repaid except under rare circumstances.?

“I have seen the Pell Grant have a great impact on students’ lives, and they are able to complete a bachelor's degree with little or no student loan debt,” said Hunt.

However, to qualify for a Pell Grant, you must demonstrate financial need through the Free Application for Federal Student Financial Aid (FAFSA) form.

Patrick Herndon , certified college advisor and principal at HB Speciality Solutions, further states that while the pell grant is essentially a gift that the government offers to students for attending postsecondary education, its impact depends on where the student is planning to attend college.?

“The grants help the most in the public-school arena, as costs are much lower,” said Herndon. “The amount is far too small to have any true impact on the overall cost [of private institutions,] as it is only $6,895.”?

U.S. News reports further on the impact of the Pell Grant, with one source noting that the Pell Grant covered nearly 50% of costs for commuting students. But he additionally notes that it’s rare that the grant is the only source of aid the students are receiving.?

"I would say the Pell Grant is impactful at any school," said Jim Anderson, financial aid director at Montclair State University, in U.S. News. "About 43% of our undergraduates (were) getting Pell Grants. That's higher than the national average and reflective of the community we serve, so the Pell Grant is extremely important to our institution and to our students here."?

Now that you understand what the Pell grant is and its potential impact on your college costs, you now may be wondering if you qualify and what steps you should take next.?

How To Apply for the Pell Grant?

Hunt states the application process for the Pell Grant starts with completing the FAFSA on studentaid.gov .?

From there, she states that schools will then use the information on the FAFSA form to determine any eligibility for a Pell Grant, and if so, how much the student is eligible to receive.?

It’s important to note that the Pell Grant amounts can change yearly.?

For example, Hunt cited that the maximum Federal Pell Grant award is $6,895 for the 2022–23 award year (July 1, 2022, to June 30, 2023).?

You should additionally keep in mind that while the total award amount caps at $6,895 for the current academic year, multiple factors determine the exact award amount you receive, such as the following:?

• Your expected family contribution, or EFC

“The EFC is a number that colleges use to determine how much financial aid to give you if you enroll,” reported Forbes. “However, the EFC is frequently misunderstood. Many people believe the EFC tells you what you will have to pay or how much aid you’ll receive. But that’s not the case.”?

Effective for 2023-2024 award year, the EFC will be replaced with the student aid index, or SAI.?

Major (positive) changes to note include that the SAI will not be divided based on the number of students in college within a family; eligibility for Pell Grants will be based between zero and 175% to 400% of the poverty line; it will be possible for incarcerated students to be eligible for the Pell Grant; and if a student is eligible for the maximum federal Pell Grant, the SAI will be set to 0 but the financial aid formula can allow for an SAI as low as -$1,500.?

“This can help colleges more accurately determine a student’s financial needs,” reported The College Investor. ?

• Your cost of attendance?
• Your status as a full-time or part-time student
• Your plans to attend school for a full academic year or less

U.S. News reports that the Pell Grant is unique in that the student's eligibility does not vary across schools, as long as the institutions participate in the federal student aid program. About 6,000 institutions participate, according to the most recent Department of Education numbers.

If all of this sounds overwhelming and like a lot to take in, just take the first step and log in to studentaid.gov and set up your account. From there, Hunt assures that you can seek out assistance from your high school counselor with the details.?

“Students can work with their school counselors to get help in completing the FAFSA and many high schools do FAFSA Completion nights that include the parents,” said Hunt. “You do not need to be accepted or committed to a particular college to apply.”

Qualifiers for the Federal Pell Grant

There are some standards and hard rules to follow to get (and keep) your Pell Grant.?

The guidelines are as follows:?

To receive:?

• You must demonstrate exceptional financial need on the FAFSA. Students whose total family income is $50,000 a year or less sometimes qualify, but most Pell grant money goes to students with a total family income below $20,000.?
• You must maintain enrollment in an undergraduate course of study at a nonforeign school to receive a Pell Grant.
• You must be a U.S. citizen or eligible noncitizen.
• You must have not yet received a bachelor's, graduate or professional degree. (While graduate students are not typically eligible for Pell Grant aid, in rare cases, individuals seeking a post graduate teacher certification may be eligible.)?

To maintain eligibility:?

• You will need to fill out the FAFSA form every year you’re in school to stay eligible for federal student aid.
• You will need to make sure you are making Satisfactory Academic Progress according to your school’s standards. (i.e., You may lose the grant if you withdraw from courses, do not maintain your enrollment status or fail to meet certain GPA requirements.)?

Other factors that influence eligibility/maintaining eligibility:?

• “Students who are incarcerated in a federal or state institution, or who are convicted of certain crimes, are generally not eligible for the Pell Grant except through an experimental Second-Chance program that partners with 130 colleges to allow some prisoners to take college classes,” reported U.S. News . “Once an individual is released, eligibility limits for federal student aid may be removed.”
• Once you have earned your baccalaureate degree (or your first professional degree or have used up all 12 terms of eligibility), you are no longer eligible to receive the grant.

What Are My Options if I’m Not Eligible for the Pell Grant??

If you do not receive assistance via the Pell Grant, don’t lose hope. There may very well be other options out there to consider.?

For instance, Hunt mentions that there are loans, scholarships and even employers offering tuition reimbursement.?

Herndon also states that you may be in the unique situation of not getting financial assistance for your college expenses because your parents earn too much money. However, this does not mean anything if you’re going it alone funding your education.?

So, what do you do in this type of situation???

“You have to turn to loans and/or working while attending school,” said Herndon. “Many students have done it historically. It boils down to how hard you really want to go to that school.”?

There is a range of financial situations, and it’s important to determine exactly what resources make sense and may be available to you to help make your higher education journey more affordable.?

“I suggest students and parents explore all options when it comes to assistance,” said Hunt.?

So, whether it be qualifying for the Pell Grant, looking at your loan options, filling out a new scholarship application each day, asking current college students how they funded their education or looking at work/study opportunities — there are ways to make funding your education possible.?

Top Takeaways

What Is a Federal Pell Grant?

• The Pell Grant is the largest federal grant program offered to undergraduates, and its purpose is to assist students from low-income households.?
• The application process for the Pell Grant starts with completing the FAFSA on studentaid.gov .?
• You should additionally keep in mind that while the total award amount caps at $6,895 for the current academic year, multiple factors determine the exact award amount you receive.
• If you do not receive assistance via the Pell Grant, don’t lose hope. There are other options out there to consider such as work/study, loans, employer tuition reimbursement and a range of scholarships.?