Your Guide to Pell Grants

You may need to repay it in some circumstances

Teenager review financial aid options for college.
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Paying for college can be a huge financial burden. In fact, by the end of 2019, student loan debt ballooned to more than $1.5 trillion. But there are other options to help finance an education that don’t charge interest like federal and private student loans do. We examine one of those options: the Pell Grant. Learn what a Pell Grant is, how it works, whether or not you have to pay it back, and the pros and cons of using the Pell Grant to pay for college.

What Is a Pell Grant?

A Pell Grant is a federal grant given by the Department of Education to undergraduate students who have not yet earned a degree and exhibit “exceptional financial need.” Usually, the department of education awards a Pell Grant to a student pursuing a bachelor’s degree.

Students in post-baccalaureate teacher certification programs may be able to get Pell Grants, too.

How Pell Grants Work

To apply for a federal Pell Grant, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) form every year. Students who qualify may receive a maximum of $6,345 in Pell Grant funds for the 2020-2021 school year.

The amount you receive will depend on your estimated family contribution (“EFC”), the cost of attendance for your specific program, if you are a full-time or part-time student, and if you plan to attend school for the full year or less.

The Department of Education calculates your EFC based on multiple factors, including:

  • Taxed and untaxed income
  • Benefits
  • Assets
  • Family size
  • Number of family members who will attend college
  • Cost of attendance


While it’s hard to predict how much Pell Grant money you could get before you apply, the Department of Education shows you on its website how much money you can expect if you qualify based on your EFC, the cost to attend the schools you list in your FAFSA, and how many classes you’ll take.

For example, if you qualify, you may be able to get $5,895 in Pell Grant funds for the 2020-2021 school year if your EFC is $500 and your cost of attendance is $10,000.

Pros and Cons of Pell Grants

Pros
  • You don’t need to repay the money, except in some circumstances

  • Can help low-income students pay for college

Cons
  • Grant recipients need to maintain requirements

  • Income thresholds are low, so it can be tough to qualify

  • Not meant to cover the entire tuition bill

A major pro of a Pell Grant is that you don’t need to repay it. However, you may have to repay the money if you:

  • Withdraw early from the program
  • Change your enrollment status and counter your eligibility for the grant
  • Receive other federal aid or scholarships that reduce your need for the grant
  • Do not meet the requirements of your grant 

In order to continue to receive federal grant monies, you’ll need to maintain the grant’s requirements. For a federal Pell Grant, you’ll need to meet the income threshold, fill out the FAFSA, and make continuous progress toward your degree. 

Another drawback is you may not be eligible for a Pell Grant. Some situations that would make you ineligible for the grant include: 

  • Your parents make too much money
  • Your family size doesn’t qualify
  • You are incarcerated in a federal or state institution
  • You are convicted of a drug-related offense while receiving financial aid (in some cases)
  • You are convicted of a sexual offense
  • You received the grant for six years
  • You have a criminal history

Finally, a Pell Grant most likely won’t cover the cost of your full tuition. The average cost of tuition at a four-year, public university is about $20,050. This means that even if you received the full amount of a Pell Grant, you may have to come up with more than $13,000 in additional financial aid to attend a school.

Other Grants and Student Loans

While a Pell Grant is an excellent option to help fund your college education, there are other similar grants you could apply for if you don’t qualify

If you don’t meet the requirements for a Pell Grant, there are other options to finance your education. You can take out federal student loans by filling out the FAFSA, and apply for private student loans with various lenders. Though these have to be repaid, they can help cover the rising cost of college.

Choosing a public school instead of a private one may be a good way to cut down the cost of college. The average cost of tuition at a four-year public university rings in at about $20,050, while a four-year private college costs about $30,731 per year.

You also might consider a work-study program at your school, which can help offset the cost of attending college or help pay for extras like room and board, books, and dining plans.

The Bottom Line

A Pell Grant can be an effective way for you to cover some of the cost of college tuition. If you meet the income requirements and your family’s EFC is low enough, you may be able to get the full amount allowed by the Department of Education.

Remember, though, you’ll need to apply for the grant every year to continue receiving the funds. You may also have to pay back the Pell Grant if you’re convicted of a crime and/or incarcerated while you’re receiving the aid.

If certain factors make you ineligible for a Pell Grant, consider other federal grant programs as well as school- or community-funded scholarships. Federal student loans may also be a good way to pay for college, provided you understand the long-term implications of repayment.

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