What Exactly Is a Pell Grant? - What is a Pell Grant

What Exactly Is a Pell Grant?
Federal Program Offers Another Source of Financing for Students

One of the numerous potential sources of financial aid for college students is a Federal Pell Grant. This grant is a form of need-based financial aid, and unlike a loan, the money does not have to be repaid. Eligible students receive a specified amount each year under this program.

Eligibility
The U.S. Department of Education uses a standard formula to evaluate the information a student supplies when applying for a Pell Grant. This formula produces an Expected Family Contribution (EFC) number, which will determine if the student is eligible for the grant. Applicants must be undergraduate students who have not earned a bachelor's degree. Each applicant must be a U.S. citizen, or an eligible noncitizen, and needs to have a high school diploma or a GED or to demonstrate the ability to benefit from the program.

Award Amount
The maximum Pell Grant for the 2008–09 award year is $4,731. The amount of the grant depends on both the student's EFC and several other factors. These factors are the student's cost of attendance (tuition and fees, room and board, books, supplies, and so on) and the amount of time the student attends school (whether the student goes to school for a full academic year or less and whether the student is full-time or part-time). An eligible part-time student can receive a Pell Grant. The amount awarded, however, will be less than for a full-time student. An applicant may receive only one Pell Grant in an award year and may not receive Pell Grant funds from more than one school at a time.

Disbursement
A school may credit Pell Grant funds to a student's school account, pay the student directly (usually by check), or use a combination of these two methods. The school must notify the student in writing of the amount of the Pell Grant, and of how and when payments will be made. Schools must pay at least once per term, whether that is a semester, trimester, or quarter. Schools that don't use formally defined, traditional terms must pay the student at least twice per academic year.

Time Limit
Students who received their first Pell Grant on or after July 1, 2008 are limited to 18 semesters of Pell Grants. Students can receive up to two Pell Grants in one award year if they wish to accelerate their course work.

How and When to Apply
Students apply for not only Pell Grants but all federal, state, and institutional financial aid programs (except scholarships) by completing the Free Application for Federal Student Aid (FAFSA). The paper FAFSA is available from high school guidance offices, or may be completed online at www.fafsa.ed.gov. The FAFSA must be submitted by the end of June to be eligible for aid in the upcoming school year.