An Overview of the Federal Pell Grant Program

Understanding the benefits and rules

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Federal Pell grants are the most widely available type of grant program for undergraduate students. Unlike the federal loan programs (Stafford, Perkins, PLUS, etc.), Pell grant awards never need to be repaid, making them extremely sought-after by students and their families.

Pell grants are made available to students based on a number of factors, all of which are connected to a student’s expected family contribution (EFC). In other words, Pell grants are given to students who demonstrate a significant financial need. So if you're middle- or upper-income and come from a family without several dependents, your chances of getting such a grant may be low.

Pell Grant Award Limits

The maximum Pell grant award can change annually based on the amount of federal funds made available for the program. The percentage of the maximum amount that a student receives is directly affected by the student’s EFC, cost of attendance (COA) and status (full-time, half-time, etc.).

For the 2016-17 school year, the maximum Pell grant amount is $5,815. This is comparable to previous years in the recent past in which the grant has hovered above the $5,000 range.

Unlike many of the federal loan programs that have lifetime caps on borrowing, the Pell grant does not currently have a lifetime maximum on awards. As long as a student is pursuing her first bachelor's degree and is otherwise eligible, she can receive Pell grant funds.

The Expected Family Contribution

Federal Pell grants are awarded to individuals based on their expected family contribution (EFC), which is calculated using the assets and income of both the student and his parents. As a student’s expected family contribution rises, his potential Pell grant amount decreases. Above a certain EFC level, no Pell grant will be awarded.

The Cost of Attendance

Pell grant award amounts are affected by a student’s cost of attendance for her college or university. The greater the (COA), the closer the student will get to receiving the maximum Pell grant amount.

Student Status

Pell grant award amounts are also affected by a student’s attendance status. Full-time students are eligible to receive the largest grant amounts, with three-quarter, half-time, and less than half-time students receiving less. It’s worth noting that the Pell grant is one of the few programs that makes money available to students attending less than half-time.

The maximum Pell grant award per category changes over the years, but you can visit the U.S. Department of Education's Federal Student Aid website, to learn the maximum awards for the specific category that interest you.

Pell Grants for Graduate Students

Pell grants are primarily available to undergraduate students. However, certain graduate teacher credentialing programs may also be eligible. Contact the Federal Student Aid site for more details, or contact the financial aid department at your university for help.

The Application Process

To be considered for a Pell grant, you must complete a FAFSA form. Completing this form will help determine your eligibility for other loan and aid programs as well. Once completed, the Free Application for Federal Student Aid (FAFSA) form is forwarded to your school, which will then inform you of your Pell grant eligibility.