Pell Grants: A Simple Guide to Understanding Them

February 23, 2021 Loans & Finance

The Pell Grant is a federal grant that’s awarded to students with financial need. The amount changes every year, but it’s money that you can use for college and don’t generally need to repay. Here are four things to know about what a Pell Grant is, and how you can get one to help you pay for school:

What a Pell Grant is (and isn’t)
How to get a Pell Grant
How much money Pell Grants award
How to pay for college in other ways

What a Pell Grant is (and isn’t)

The federal government offers Pell Grants to students with exceptional financial need. Your grades and extracurriculars don’t factor in.

Unlike student loans, however, you don’t need to repay a Pell Grant. The maximum amount of a Pell Grant for the 2020-21 year is $6,345.

For the most part, only undergraduate students are eligible for Pell Grants. In some cases, though, you could receive one as a teacher in a post-baccalaureate certification program.

To be eligible for the Pell Grant and other federal aid, you need to complete a Free Application for Federal Student Aid (FAFSA).

To remain eligible throughout college, you must also fill out a FAFSA every year you’re in school. If you’re a dependent student, your family’s income will be a big factor in determining how much aid you’ll receive from the government.

How to get a Pell Grant

After you fill out your FAFSA, you’ll be notified of your Expected Family Contribution (EFC) in your award letter, which also outlines how much aid you’ll receive from scholarships, grants and loans. Note that the EFC will be renamed as the Student Aid Index (SAI) starting on the 2022 FAFSA.

You’ll be considered for other federal grant programs when you complete the FAFSA, but the Pell Grant is one of the largest available. While there’s no age limit, Pell Grants are awarded to undergraduate students who are enrolled at least part time. Your school can use your Pell Grant funds to pay you directly or apply them to your costs — or a combination of both.

Keep in mind that you can receive federal Pell Grants for no more than 12 semesters (or about six years), but the Department of Education doesn’t say they have to be consecutive.

As mentioned, Pell Grants are awarded to students who demonstrate financial need. If you have greater need, you’ll be awarded more than someone who has the means to contribute financially to their education.

You don’t need to choose a particular school to qualify for a Pell Grant, but some colleges offer their own awards in addition to any federal grants you receive.

Plus, you can apply to scholarships from external sources to get extra funding for school.

How much money Pell Grants award

How much you’re awarded will depend on several factors:

Your financial need
Your school’s cost of attendance
Whether you’re a full-time or part-time student
Whether you plan to attend for a full academic year

While the maximum Pell Grant award for the 2020-21 school year is $6,345, amounts can change yearly. If your status changes, so will your award amount.

Since the average cost of tuition and fees at a four-year public institution is nearly double the maximum Pell Grant award, you’ll probably need more than this one grant to pay for college. That’s OK — it’s common for students to use multiple resources to pay for college.

How to pay for college in other ways

Once you’ve exhausted your federal options, research grant opportunities at the state and institutional levels. Many scholarships are available as well.

And while most scholarships are based on merit, not need, you might be able to use them to find extra money for college. Here are some resources to help you get started:

Read up on scholarships for…
● High school students
● Current college students
● First-generation students
● Asian students
● Black students
● Latino and Hispanic students
● DACA students
● Minority students
● Community service
● Military service
● Professional development
● Single parents
● Single moms
● Student-athletes
● Out-of-state students
● Nursing school
● Medical school
● Photography
● Poetry
● Art
● Music
● Communications
● Journalism
● Criminal justice
● Business
● Computer science
● Studying abroad in Japan
● Studying abroad in Canada

Student loans also can help you pay for college. There are federal loans, such as the ones outlined in your award letter, and private student loans, which you can apply for in addition to any federal aid you receive. Your parents can also see if they qualify for parent PLUS loans to help cover your college costs.

There are many different and affordable ways to pay for college, so don’t limit yourself to a single source.

Rebecca Safier contributed to this report.

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