paying for college

Pay for College – Pell Grants

paying for college
College tuition doesn’t have to eat a hole through your stomach.

A lagging job market and the increasing cost of a higher education have made it more difficult for undergraduate students to pay for college; for many, financial aid is now a necessary and unfortunate aspect of the college experience. While there is a voluminous amount of information available to interested students and parents, the process of applying for financial aid can still be confusing. This series is intended to help you understand your different financial options; my goal is to help you figure out how to pay for college.

In this first post, we will discuss Pell Grants, which occupy a unique place in the world of financial aid. Almost exclusively specific to undergraduate students seeking their first degree, Pell Grants are highly prized because they are fully subsidized and do not require repayment. To qualify for a Pell Grant students must first complete and submit their Free Application for Federal Student Aid, or FAFSA. Filling out the FAFSA means you will be automatically considered for a Pell Grant; although they are primarily reserved for students who need them the most.

pay for college
Uncle Sam wants YOU to go to college!

There are two specific Pell Grant eligibility requirements. The first is that you must be accepted as undergraduate and seeking your first degree. The only exception to this is for post-baccalaureate students seeking a teaching certificate. The second requirement is fairly simple – you cannot be currently incarcerated.

The primary factor in determining eligibility for Pell Grants is the ability to demonstrate financial need. This is where things get a bit technical, so pay attention…

Financial need is defined as the difference between the aggregate cost of attending college, which includes general expenses like tuition, fees, and books plus living expenses, minus the student’s Expected Family Contribution, or EFC.

A student’s EFC is automatically calculated upon the completion of his or her FAFSA using relevant factors such as the student’s and parents’ income and assets, the size of the student’s household, and the number of family members currently attending post-secondary institutions.

To qualify for a Pell grant in the 2012-13 school year a student’s Expected Family Contribution must not exceed a maximum threshold of $4,995. Just to be clear: the higher a student’s EFC, the less in need that student is in the eyes of the government or a university; the lower a student’s EFC, the more in need that student is in the eyes of these institutions. So, if a student’s EFC exceeds $4,995 that student may still qualify for financial aid, however he or she will not be eligible to receive financial aid through a Pell Grant. It is also important to note that a student’s Expected Family Contribution is not necessarily the amount a family will contribute toward tuition. Rather, EFC is the number used to gauge need by a university’s financial aid office. A student’s Expected Family Contribution might be better understood as a student’s potential family contribution, which financial officers take into consideration when deciding financial aid. The actual cost of college to a student’s family will depend on  the final decisions of the financial office.

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The first step to applying for a Pell Grant is completing and submitting the FAFSA. Don’t forget: the earliest you can submit a FAFSA is January 1 and the deadline is June 30.

The most important question to an interested and eligible Pell Grant applicant might now be, “How much aid can I qualify for?” The answer is, of course, it depends. For example, a full-time student with an EFC of zero will be eligible to receive the maximum annual amount, which in 2012-13 will be $5,500, or $2,750 a semester. On the other hand, a student who meets but does not cross the EFC maximum of $4,995 might only qualify for the minimum amount, which in 2012-13 will be $577, or $288.50 a semester. It is important to note that a student’s eligibility to receive a particular amount of funding does not necessarily translate to the amount of funding a student will receive. Universities do not have equal access to Pell Grant funds; some schools receive more funding than others. The real dollar amount a student receives through the Pell Grant is determined by the university’s financial aid office, and is dependent on a number of factors. For example, state schools will have more access to Pell Grants than private universities and schools with larger endowments will not receive as much public funding as schools that lack such financial resources.

Pell Grants are popular among students seeking financial aid because they do not have to be paid back; however, this is not always true. Dropping classes or withdrawing entirely from school may change your status as a student from full-time to part-time, or to not-enrolled. Any action that changes your status as a student also has a significant impact on the financial aid you are eligible to receive. If these actions are done after a certain date or after the account has been credited then the student will be responsible for repayment with interest. Essentially, any money a student receives through Pell Grants is exclusively for school-related expenses and is given with the expectation of good faith on the part of the student. If that faith is violated, then the money that was given to the student becomes a loan, not a grant. Loans, unlike grants, have to be paid back.

Pell Grants
Pell Grants can make those books feel a little less heavy.

Eligible students often wonder how long they will be qualified to receive Pell Grants. Assuming no changes have occurred to alter a student’s financial status, or any other relevant factor, so long as a student satisfies their university’s standard for academic progress they will be eligible to receive financial aid through Pell Grants until they graduate. Academic progress is measured differently at different universities, but it typically involves earning a minimum number of credits per semester.

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There are many factors that must be considered throughout the financial aid process, and everybody’s situation is uniquely their own. This article’s aim is to guide students through some of the more specific and confusing requirements of Pell Grants; however, two other useful guides for any financial aid applicant, according to my own research and common sense, are the student’s preferred university’s financial aid office and FAFSA website.

Stay tuned for the next post in Test Master’s financial aid serial, “Paying for College,” where the most common kind of student loans, Stafford Loans, will be covered!

Additional information about Pell Grants can be found at:

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