Are you wondering how you’re going to finance your college education?
If so, you’re not alone. With the rising costs of education and living in general, many families simply can’t save enough to cover tuition costs. This is one reason why more than 30% of Americans need to take out some sort of loan (or, in other words, go into debt) to pay for college.
Wouldn’t it be great if there was a way to get free money for college? Did you know that the government offers that exact option in the form of a federal Pell Grant?
What is a Pell Grant, exactly? What determines Pell Grant eligibility? How much money can you receive for your education? Most importantly, how can you get started on your Pell Grant application?
We’ll answer these important questions and much more, so continue reading below!
What Is a Pell Grant?
It’s no secret that going to college doesn’t come cheap. The average student graduates with over $28,000 in student loan debt and spends between 8-14 years paying it off.
To help ease the financial burden of attending college, the US government first created the Higher Education Act of 1965. Under this provision, needy students could receive up to $1,000 of “free money” to attend college. In 1972, the program was expanded to include Basic Educational Opportunity Grants (BEOG) in amounts up to $1,400.
Fast-forward to 1980, when BEOGs were renamed “Pell Grants.” Not only was this easier to pronounce, but it was named in honor of Rhode Island Senator Claiborne Pell — the driving force behind the program.
The government authorized more financial aid programs for students throughout the 1980s, gradually shifting their focus from grant-based aid to loan-based aid. In other words, most funding options would require repayment after the student graduated.
However, through all these changes, the Pell Grant has endured. In fact, it’s now the largest grant program offered by the US Department of Education.
Today, when a student fills out their Free Application for Federal Student Aid (FAFSA), they’re automatically considered for Pell Grant eligibility.
Why Is a Federal Pell Grant Different Than Other Financial Aid?
The main difference between a Pell Grant and other types of funding is what happens after you graduate. While almost all types of students loans must be repaid (with interest), the money you receive from a Pell Grant does not.
Yes, really! There are no hidden fees or strings attached. It truly is free money to help cover the costs of tuition, room and board, and other living expenses.
Who says you can’t get something for nothing?
How Much Money Can I Receive With a Pell Grant?
Before you get too excited, keep in mind that there’s a cap on how much you can receive through a federal Pell Grant. For the 2021/2022 school year, the maximum amount awarded to full-time students in need is $6,495.
(Keep in mind that this is the maximum amount and many students receive far less than this! The minimum amount for a Pell Grant is $650. Most students that qualify receive an amount that falls somewhere in the middle.)
Depending on the college or university you attend, a Pell Grant could cover 100% of your expenses — or it could only be a drop in the bucket. If you live at home and attend a local community college, for example, a Pell Grant could be the only type of financial aid you’ll need.
For most students, though, a Pell Grant is just one part of a larger financial aid picture. Chances are you’ll still need to combine the Pell Grant with other types of funding, such as traditional student loans or the federal work-study program.
With that said, a Pell Grant is still highly desirable because you don’t need to pay it back.
How Do I Qualify for Federal Financial Aid?
Before we discuss Pell Grant eligibility in more detail, let’s review the basic criteria you’ll need to meet to receive any federal financial aid (including the Pell Grant).
Here are the seven criteria you’ll need to meet.
1. Be a US Citizen or Eligible Non-Citizen
If you were born in the US or you immigrated and have a Green Card, you’re good to go. Otherwise, you’ll need a T-Visa, an I-94 Arrival-Departure Record, or have battered immigrant status.
2. Be Finished With Your Primary Education
In most cases, this means you’ve completed high school and received your high school diploma. You can also qualify if you have a General Educational Diploma (GED) or you graduated from an approved homeschooling course.
3. Be Accepted Into an Eligible Institution or Program
Before you can receive financial aid, you first have to apply and be accepted into the college or university of your choice. Most accredited schools and programs qualify, but you can always check with the financial aid office to be sure.
4. Have a Valid Social Security Number
If you’re a US citizen or resident, you likely already have one. The exception to this rule is if you’re a citizen of the Republic of the Marshall Islands, the Republic of Palau, or the Federated States of Micronesia.
5. Be Registered With the Selective Service
If you’re a male citizen between the ages of 18-25, the government requires you to register with the Selective Service System. You can find out more information here if this applies to you.
6. Be Willing to Sign FAFSA Statements
When you fill out your FAFSA, you must attest that you’re not currently in default of any previous student loans. You must also state that you’ll only use your federal aid money to pay for your education (no exotic trips to Tahiti, sorry).
7. Maintain Satisfactory Progress as a Student
The government is only interested in funding the education of students who are serious about learning. To continue to be eligible for a Pell Grant and other federal aid, you’ll need to maintain satisfactory academic progress while you’re in school.
What Are the Basic Pell Grant Requirements?
Hopefully, after reviewing these general requirements, you’ve learned that you’re eligible to apply for federal financial aid. This brings us to the main topic for today: How do you know if you qualify for a Pell Grant?
The main factors include:
- Having “exceptional” financial need
- Your family’s Expected Financial Contribution (EFC)
- The cost of tuition at your chosen school
- Your enrollment status (full-time vs part-time)
Important note: Pell Grants are awarded primarily to first-time college students. With few exceptions, you will not qualify for a Pell Grant if you already have a bachelor’s degree or another professional degree.
With this overview, let’s focus on the main aspect of Pell Grant eligibility — your financial status.
What Qualifies as Financial Need?
It would be easy if there was a predetermined figure for determining financial need. Unfortunately, there’s no clear-cut, “one size fits all” answer to this question.
The general idea is this: The greater your family’s financial need, the greater your chances of receiving a Pell Grant.
The good news is that the government factors in more than just your family’s annual income. They also consider your expenses. The lower your income and the higher your expenses, the more you show that you have “exceptional” financial need.
Income includes your personal income, your parents’ income (if you’re still their dependent), and your spouse’s income if you’re married. It also factors in any major assets the family owns, such as a house, along with any savings accounts.
Expenses take into account the number of people in your family, the number of family members attending college, and the cost of attendance (CoA) at your chosen school. It also factors in the enrollment status and year in school of each attending family member.
You’ll enter all of these details when you fill out your FAFSA. With this information, the government can calculate another figure known as the Expected Family Contribution (EFC). For the 2021/2022 school year, if your family’s EFC is at or below $5,846, you’re eligible for a Pell Grant.
We don’t have time to go into the exact math that determines CoA and EFC, but here’s a brief overview of how Pell Grant funding works:
For Families That Earn Under $26,000 Annually
Families earning below this threshold will have an EFC of zero. This means you’re qualified for the maximum amount of Pell Grant funding as long as your annual tuition costs more than $6,195.
For Families That Earn Under $30,000 Annually
If your family’s income falls between $26,000-$30,000, you will probably qualify for a high amount of funding (but not the maximum amount).
For Families That Earn Between $30,000-$60,000 Annually
If your family’s income falls in this bracket, you will probably qualify for some funding, but nowhere near the maximum amount.
For Families That Earn More Than $60,000 Annually
With few exceptions, you probably won’t qualify for Pell Grant eligibility if your family earns more than $60,000 per year.
Important note: If your parent died as a member of the US Armed Forces in Afghanistan or Iraq or they died in the line of duty as a public safety officer, you can likely qualify for a higher Pell Grant amount.
How Do I Complete My Pell Grant Application?
As we’ve mentioned throughout, there’s no separate application for a Pell Grant. You’ll automatically be considered for Pell Grant eligibility when you fill out your FAFSA. It’s easy, it’s online, and best of all — it’s free!
Here are some quick tips to help you prepare.
1. Know Your Deadlines
Applying for financial aid isn’t a “one and done” deal. You’ll need to fill out a fresh FAFSA for every year you plan to attend college.
First-time college students especially will want to get their FAFSA completed as soon as they start receiving acceptance letters. Technically, the earliest you can apply is January 1st of the year you’re going to start school.
The federal deadline for FAFSA applications is June 30th of the year you’re entering school. However, each state has its own priority deadline and requirements as well. You’ll want to double-check the deadlines for the state where you’ll be attending college.
2. Gather All the Information You’ll Need
Here’s a quick list of the things you’ll need to complete your FAFSA:
- Your social security number or alien registration number
- Most recent federal tax returns (yours and/or your parents’)
- W-2s, 1099s, or other income records
- Bank statements
- Investment records (if applicable)
- A free FSA ID if you’re submitting online
It’s important to note that you’ll need all of this information from your parents as well, even if they’re not directly helping you pay for school. The only exceptions to this rule are if you’re:
- Married
- Have your old children
- Homeless
- An active military member
- In the foster care system
- Legally emancipated
3. Set Aside Time to Complete Your Application
Once you have all the information you need, the application is fairly straightforward. Plan to set aside 1-2 hours to fill everything out. If possible, arrange for your parents to be there (or at least available) in case you need more information from them.
Most students prefer to submit their FAFSA electronically, as it ensures a faster turnaround time. If you’re not on a time crunch or you just prefer to do things the old-fashioned way, you can still print, fill out, and mail in a paper FAFSA.
If you do qualify for a Pell Grant, you’ll receive notification from the Department of Education. You can choose to receive the funds directly, have them paid to your school, or a combination of the two.
Pell Grant Eligibility: What If I Don’t Qualify?
After reading this article, you now have all the information you need about the federal Pell Grant. Basically, it’s the government’s version of “free money” for college!
The good news is there’s no special application process to determine Pell grant eligibility. All you need to do is fill out your FAFSA — which you’ll need to do anyway before starting college — and you’ll automatically be considered for a Pell Grant.
If for some reason you don’t qualify, don’t worry. You can still achieve your goal of higher education. There are plenty of other ways to help pay for your college tuition and living expenses.
We know how stressful it is to think about how you’re going to pay for college. That’s why we’ve created this website to help you understand all the different options that are available to you. Stay right here and keep browsing our site for more helpful information about grants, financial aid, budgeting for college, and much more!