To see the words “free cash for college” might trigger a warning that you are being trolled for a fake come-on or fraud. But unlike marketing gimmicks, Pell Grants are a very practical way of receiving federal college funding that you don’t usually have to pay the money back. Here’s what you need to know about how Pell Grant works and other important relevant information that you can’t leave out before applying.
How Does Pell Grant Work?
The Pell Grant is the federal government’s need-based financial aid program aimed at helping undergraduates from low-income families pay for school. Unlike loans, grants don’t require you to pay back any money and bear no interest. Your qualifications and the amount you receive will be defined by your financial need based on details given in the Free Student Aid Application, more formally known as the FAFSA.
Every year the federal government modifies the maximum award amount. Based on financial need, all qualifying students earn at least 10% of the overall award amount for the year. Every year, pell-eligible students earn up to 150% of their scheduled awards. This includes summer semesters which can allow students to complete their degree earlier.
By increasing educational opportunities, Pell Grants help narrow the gap in post-secondary achievement between students of low and moderate income and those of greater privilege. They increase college registration, lower dropout rates, and boost student achievement. These also help to speed up graduation and increase college completion rates by encouraging students to work less and take more classes. Nor does Pell Grants do anything, amid common arguments to the contrary, if anything to drive tuition increases at universities. That is, in general, the colleges do not increase tuition on the premise that the blow would be cushioned by Pell Grants.
The students submit a Free Application for Federal Student Assistance (FAFSA) to apply for Pell Grants. The Department of Education uses the details to calculate the EFC, using a formula set out in the Higher Education Act. The disparity between an EFC and COA for a student determines the unmet need for the student. The main factors driving the EFC are a family’s income, assets, and size, the number of family members in school, whether the student is a dependent (and, if so, must provide information about the parents) or independent (and, if so, need not provide parental information), and whether the student has dependents. Registered students accounted for around half of Pell’s beneficiaries and expenses in the 2015-16 academic year, the most recent year for which data are available.
Pell Grant Graduate School
By and large, graduate school students get the rough end of the financial aid stick as opposed to what’s offered to undergraduates. For instance, in 2014, 9.2 million undergraduates earned Pell Grants to help cover the costs. Pell Grants are a federally funded program, which provided undergraduates with $33.7 billion in “free money.”
Pell Grants are, however, not eligible for graduate students. Loans are available for graduates, but are payable at higher interest rates than undergraduates. The interest rate for graduate students on Direct Unsubsidized Loan is 6.21 percent for the 2014-2015 academic year, but just 4.66 percent for undergraduates.
Subsidized loans – those in which the government pays the interest when you’re in school – are also not eligible for graduates.
Pell Grant Disbursement
Pell Grants are disbursed directly to the school and only distributed in one of two ways: as a credit on your account or by cash, check or EFT directly to you. Schools are expected to tell you how and when the funding will be received, which will be on a payment schedule defined by them and provided at least once per period and twice per academic year. The school decides how to apply the tuition, school fees and room and board support. When there is a deficit left, the school will directly disburse the funds to you to pay for educational expenses.
Pell Grant Deadline
Pell Grant applications must be submitted in advance of the April deadline of each academic year. Students are expected to apply early, as funding is limited and distributed on a first come, first served scheme.
Pell Grant Calculator
There are a number of factors that go into deciding the award amount for Pell Grant recipients. The minimum amount that can be awarded is currently $650. The maximum is $6,095 for the 2018-2019 award year (July 1, 2018 through June 30, 2019). Students attending school year-round — in fall, spring and summer — can receive 150% of the maximum award, or $9,142.
Some factors impacting the amount of money you will be received include:
- Tuition and school expenses.
- Student’s financial need, which is determined by the Estimated Family Contribution (EFC) on the FAFSA application.
- Student’s enrollment in school either part time or full time.
- Whether or not the student plans to attend classes for a full academic year.
You can use a Pell Grant Calculator to calculate the amount that you can get. The FAFSA4caster Calculator can be used as a Pell Grant Calculator; the Federal Student Aid Office, FAFSA website provides this application. It will give you a clearer sense of the total sum of the Pell grant you will be entitled to obtain.
Texas Pell Grant
State education funding increases access for a diverse student population, but it cannot be underestimated in federal financial aid. Pell Grants offers gift aid to vulnerable students, including those who receive at least some money to contribute to their own education. Many state programs depend on FAFSA data to assess the degree of need for each student, so the application for federal financial aid on most campuses is still needed. File it within university deadlines, and you won’t be left behind when Texas student grants are running dry.
NJ Pell Grant
The New Jersey Pell Grant is used for college attendance. You can use this grant at any New Jersey college as long as you enroll in the Federal Student Aid Program, and if your school has a federal school code of 6 digits. You’ll be able to know if your EFC is eligible for the New Jersey Pell Grant. If your EFC is below 3850 then you can apply.
2020-21 Pell Grant Chart
The Department of Education, signed by Chief Operating Officer Mark A. Brown, released the Pell grant payment charts for the award year 2020-2021, on January 31, 2020.
The newly published charts are based on President Trump’s More Consolidated Appropriations Act, 2020, which was signed into law on 19 December 2019. The bill lowered the total expenditure of the FY2020 Department of Education by 10% which included the cancelation of $2B of unobligated balances in the Pell Grant program. Applicant growth rose by 0.82% for the 2019-20 award year, according to the Department of Education.
For qualifying students with an EFC 0 the cumulative Pell grant payment for 2020-2021 is $6,345. In addition to increasing the maximum Pell eligibility, total Pell extended to include students with an estimated family contribution (EFC) of up to 5,711. An increase of 5,576 from the total Pell qualifying EFC in last year.
- Download: 2020-21 Pell Grant Chart.pdf (186KB)