The Federal Pell Grant: What you need to Know!
The Federal Pell Grant as we discussed in our previous post about College Grants falls under the “umbrella” of financial aid. It’s an important piece of the puzzle as it’s free money that does not need to be paid back. During my time in finance when I would present this piece of the puzzle to students they were certainly aware of it, however there were some aspects that they weren’t aware of and that threw them for a loop when those facts applied to their situation.
What is a Federal Pell Grant?
It’s basically the same definition as the general explanation of a college grant. Its money from the U.S. government that you do not have to repay. Out of all the other grants provided by the government, the Pell Grant stands tall and stands above them all. It’s the most common one used and it’s the one that’s been able to help the most amount of students with their educational pursuit.
FAFSA Pell Grant Conditions
There is a starting line to the Federal Pell Grant and that is the complete of the Free Application for Federal Student Aid (FAFSA). Like the receiving of the Pell Grant, the completion of the FAFSA is free. There is a staggering amount of people who don’t complete this because they may feel that they are not eligible to receive anything. Students will need to show that they have financial need (the FAFSA will be able to show this). An Expected Family Contribution (EFC) number will be determined from the FAFSA and that number will dictate your Federal Pell Grant awards.
To bullet point the key facts here this is what you need to pay attention to:
- EFC number determined by the FAFSA
- Student status (full-time or half-time)
- Academic year and how much of that year will a student be enrolled
Federal Pell Eligibility
To piggy back off the section above, you must be pursuing an undergraduate degree or be enrolled at a vocational school. Remember the schools need to be a participating school. If you have earned your bachelors already, then you will not be eligible for the Federal Pell Grant. In conjunction to the FAFSA and the maintaining of satisfactory academic progress once enrolled….
You must also:
- Exhibit that you have Financial Need. Now to define this, Financial Need is the difference between the schools Cost of Attendance (COA) and the Expected Family Contribution Number (EFC) that’s generated by the FAFSA. This is why that EFC number is vital.
- You must also be a United States citizen or an eligible noncitizen.
- To be considered, you must also have a valid Social Security Number.
- For males, they must have been registered with Selective Service between the ages of 18-25
- Have a high school diploma (or GED).
Federal Pell Grant Awards and Limits
Even though the Federal Pell Grant is free, there is a limit and this limit is extremely important to know so you are not “side-swiped” by this. I’ve unfortunately seen this happen way too many times in my professional career.
What a student will get awarded is based on the academic year. The Academic award year runs from July 1st – June 30th). Currently the maximum amount that can be awarded is 6,095 and next year, which is 2020 it should be 6,195 so again, this is super important to understand.
The Pell grant will more than likely be applied to the school costs by your school. This should be explained to you in your financial aid award letter. Schools also have to disperse the Pell grants once a semester or twice during that academic year. Then once the new academic year turns the award resets. Now this is also super important for you to know and understand, but the Pell grant there is what’s known as the lifetime eligibility used amount or LEU for short.
By federal law, you can receive Pell grants for the equivalent of 12 semesters if full time which is about six years. Now you could hit that amount sooner if you take summer classes, fail or withdraw from classes.
So each academic year’s worth 100% and you’re limited to 600%. Think about it like this, a hundred percent is representing one academic year. I know that this seems like a lot of information, but the good news is that you could track this on the National Student Loan Database System. It’s also known as the NSLDS.
Here’s a quick example of the Pell Grant
$6,095 is what you are eligible for (determined by the FAFSA)
You are enrolled as a full-time student for the academic year and there are three semesters in the academic year. In those first two semesters, the Pell Grant will be split and you will receive $3,047.5 in each semester. However, in the third semester no Pell Grant will be awarded. It will begin again the next academic year.
Important to note that if you are not full-time (three-quarter time or half-time) then the amounts disbursed get affected and can carry over to the third semester.
Based on My Experience
I’ve seen some students in my professional experience get into some difficult situations and a lot has to do with the Pell grant. I’ll explain if you take courses and then fail than the Pell grant award doesn’t go back into the pool of the unused amount, so I urge you to be ultra-careful and strategic if you’re going to withdraw from a class, especially if you’re receiving Pell grants.
As shown in the example above, when planning financially for your academic year, you want to be very careful aware of which terms may not include a Pell grant for your tuition. For example, I once worked at a school that had three semesters in the academic year on many financial plans. The Pell grant is first for the first and second semester of that academic year. Once that third semester rolled around, there was a balance of the term due to the fact that that Pell grant exhausted for that year. So please, please, please, please, please, please, please, please plan accordingly. You can see in the example above how that works where one semester will leave you short of the grant. Those terms might present a balance due. However, if we know it and we’re able to be proactive about it, then it’s not as bad and not as unexpected.
Pell Grant Application
As you can tell by now, the FAFSA is what’s needed but here are some other important things to note when applying for the Federal Pell Grant.
- Students must apply for their FSA ID. You can do
so here: https://fsaid.ed.gov. For
the FSA ID You’ll need to:
- Provide personal information (name, social security, date of birth)
- Include mailing address
- Provide challenge questions
- Verify e-mail
- You will be able to use your FSA ID in 1-3 business days
- Must complete the most recent FAFSA application
- Complete loan entrance counseling. You can complete that here: http://www.studentloans.gov/
What Does the Pell Cover?
If awarded the Pell Grant, please make sure you are aware at what the Pell Grant covers and of course what it does cover. They can be used for a variety of costs. See below:
- Tuition and fees
- Supplies, Boks, transportation, and even person expenses
- Living expenses (room and board)
- Dependent care for students with dependents
Now in my experience, the school I worked with at the time handled the disbursement of the Pell Grant to the students account. We generated budget worksheets this way they can see this. So the flow went like this for students who already completed the FAFSA application:
- Student classes were scheduled
- Students account was then billed based on the amount of classes scheduled in the semester
- Classes would begin and student would be in attendance
- Waited for Week 2 of classes for disbursements (withdrawal grace period)
- Pell Grant (and other funds if student is using them) applied to students account
If anything money was leftover, then it would be excess funding. The student can then request that money to come to them or stay on account. If the money comes to the student then they are able to use it for the school expenses outlined above. Again it’s vital to have that budget worksheet at all times so you know where the money is coming from. The excess funding can be a combination of the Pell Grant and other sources (such as loans). That is where it’s gets challenging to understand. Because technically part of that excess money you receive does not need to be paid back and some of it will (if it was derived by loans. Again this is tricky but I want to reiterate the importance of this to arm you with knowledge.
Pell Grant Myths
Federal Pell Grants Only Apply to Those will Extreme Financial Need
True but it’s not based entirely on family income. Middle class families can still receive the Federal Pell Grant. However, based on the EFC number it may not be the maximum amount. Nevertheless, free money is free money.
You will Qualify Every Year for Pell Grants
Eligibility may change from year-to-year. You are required to complete a new an updated FAFSA. This can lead to different data due to the changing of financial situations. Therefore this can and will alter the amount for the Federal Pell Grant that you will receive.
Non-Financial Circumstances are Not Considered
Actually students may be eligible for large Pell Grant awards due to non-financial circumstances. Children of service members who unfortunately have died in military service after the events of 9/11 may be eligible to receive the maximum Pell Grant amount regardless of family income.
The Federal Pell Grant can pay for my entire Tuition
Interesting one to answer for sure. So if the cost of credit is really affordable and low (perhaps at a community college) and you receive the full amount of the Pell Grant then it will make a significant dent in your tuition. However, it’s going to take more than the just the Pell Grant. Now that doesn’t mean loans but more than likely it’s going to need to be coming from another source. If you are going to a private college or trade school then the tuition is going to be more than the state university. Therefore the Pell Grant will take you so far.
Tuition Drop Podcast
You can check out our episode of the Tuition Drop Podcast below on Federal Pell Grants.