What Is a Pell Grant?

A Pell Grant is a federal subsidy for post-secondary education that is awarded through a federal program. The amount of aid depends on the student's financial need.

Students are eligible for Pell Grants for post-secondary schools including universities, colleges, trade schools, and other training programs. Unlike other federal financial aid programs, Pell Grants do not have to be repaid.

Key Takeaways

  • Pell Grants are awarded based on financial need.
  • Applicants must complete a Free Application for Federal Student Aid (FAFSA┬«).
  • The amount a student may claim is determined by financial aid counselors at the schools that consider the student's application.

A student applying for a Pell Grant must complete a Free Application for Federal Student Aid (FAFSA®). The application may be completed online and requires financial and tax information about the student and the student's family. Schools that the student applies to receive an electronic copy of the application.

How a Pell Grant Works

Financial aid counselors at the student's post-secondary school determine the total amount a student may claim from the program. Their calculations use the difference between the expected family contribution (EFC) and the cost of attendance (COA) to arrive at a grant amount.

  • Expected family contribution (EFC) is based on the student's and family's taxed and untaxed income and other assets such as Social Security benefits and investment accounts.
  • Cost of attendance (COA) is based on the school's fees and tuition as well as the cost of books, room, board, and other expenses.

Pell Grant funds may now be used year-round, a significant change from the original program.

The financial aid counselors may also consider any help from other sources such as scholarship programs and loans when determining the level of Pell Grant funding.

In certain situations, post-baccalaureate students may receive a Pell Grant.

Special Considerations on Pell Grants

Not all colleges and universities accept Pell Grants. To date, more than 5,400 post-secondary schools participate in the program. During the academic year, between July 1, 2018, and June 30, 2019, the grant amount increased to $6,095, according to the U.S. Department of Education.

Higher education institutions which participate may credit the Pell Grant to the student's school account or pay the student directly, typically by check. The school must release funds at least once per term. The term varies by school and can be a semester, trimester, or quarter. If the school selected does not have defined attendance terms, the grant funds are released at least twice in a school year.

Initially, Pell Grants did not cover summer sessions, which affected thousands of students. President Donald Trump signed a federal spending bill which established year-round access to the funds, effective July 2017.

In a 2017 press release, Justin Draeger, president and chief executive officer of the National Association of Student Financial Aid Administrators said: "Under year-round Pell, students who wish to pursue their degrees throughout the year will receive financial aid when they need it, rather than having to wait until the following semester, ultimately allowing them to complete their education more quickly so they can take on less debt and enter, or re-enter, the workforce more quickly."