As families weigh the affordability of colleges, they should be aware that the federal Pell Grant is the first form of aid a student with exceptional financial need can expect to receive.
This guide provides in-depth information about the grant, including answers to frequently asked questions.
What Is a Pell Grant?
The Pell Grant is a form of need-based federal financial aid awarded by the U.S. Department of Education to help eligible low-income students pay for college costs, including tuition, fees, room and board, and other educational expenses.
To apply for the grant, students must complete the Free Application for Federal Student Aid, known as the FAFSA.
The Pell Grant is the largest grant program offered by the Department of Education to undergraduate students. Created in 1972, the federal Pell Grant program has been awarding grants to students since the 1973-1974 school year. It was named after Sen. Claiborne Pell of Rhode Island, the chief sponsor of the program.
Do You Have to Pay Back Pell Grants?
The Pell Grant generally does not need to be repaid, but there are some exceptions. Experts say students should be aware that withdrawing from courses or changing enrollment status after a Pell Grant award has been disbursed may require students to repay their award, for instance.
Students should view the Pell Grant as a significant source of aid, but also understand it is only a part of the larger financial aid picture, says Jim Anderson, financial aid director at Montclair State University in New Jersey.
Other forms of aid may include a student loan, which will need to be paid back, or the federal work-study program, which requires students to work for an hourly wage. Anderson encourages all students to apply for financial aid and ask for help along the way, because he has seen the Pell Grant’s impact firsthand and notes that the government has increased the maximum award over time.
“I would say the Pell Grant is impactful at any school,” Anderson says. “At a school like mine, for a commuting student, who is eligible for the maximum Pell Grant, the grant covers close to 50% of the student’s costs.”
The first step to receiving a Pell Grant is completing and submitting the FAFSA. A family’s information on the FAFSA, including income and number of children enrolled in college, is used to generate a number known as the student’s expected family contribution, or EFC, and to determine whether the student is eligible for a Pell Grant.
[Read: FAFSA Deadlines You Should Know.]
How Much Is the Pell Grant?
A student’s Pell Grant amount depends on enrollment status, EFC, the cost of attendance at the chosen institution and whether the student plans to attend for the full academic year or less. Institutions use a chart from the U.S. Department of Education, which is updated annually, to calculate a student’s Pell Grant award each year based on these factors.
Students must submit the FAFSA annually to continue receiving Pell Grant funds. Because the information entered into the FAFSA may change year to year, a student’s EFC may change, leading to different Pell Grant award amounts. Other financial aid a student may qualify for will not have an effect on a Pell Grant award. The 2023-2024 FAFSA opened on Oct. 1, 2022.
The tangible impact of a Pell Grant depends largely on the college a student attends. While the grant may cover the entire cost of attendance at a community college, it may be only a drop in the bucket at some four-year colleges.
“The Pell Grant is not keeping pace with the cost of education, and it hasn’t kept pace with the cost of education for years, probably even decades,” says Brad Barnett, associate vice president for access and enrollment management and director of financial aid at James Madison University in Virginia. “For the low-income students, we are having to try to find other resources to piggyback with the Pell Grant to help make a four-year school more affordable. But it becomes more challenging every year.”
The non-taxable award amount also depends on the budget passed by Congress annually. In March 2022, President Joe Biden signed into law the Consolidated Appropriations Act of 2022, which increased the maximum Pell Grant by $150. The maximum Pell Grant award for 2022-2023 is $6,895 and the minimum is $692. The maximum EFC a student can have and still qualify for a Pell Grant award is $6,206.
The amount a student is awarded applies for the entire award year, from July 1 to June 30.
If a family’s financial situation changes after filing the FAFSA, such as a parent’s job loss or significant medical expenses, the family can submit an appeal to their school for more financial aid and the student may possibly receive a larger Pell Grant award.
Who Is Eligible for a Pell Grant?
The Pell Grant is unique among other forms of aid because a student’s eligibility does not vary across schools, as long as the institutions participate in the federal student aid program.
To be eligible, students must demonstrate exceptional financial need on the FAFSA, be a U.S. citizen or eligible noncitizen and have not yet received a bachelor’s, graduate or professional degree. While graduate students are not typically eligible for Pell Grant aid, in some cases students seeking a post-baccalaureate teacher certification may be eligible.
Currently, students who are incarcerated in a federal or state institution, or who are convicted of certain crimes, are generally not eligible for the Pell Grant except through an experimental Second-Chance program that partners with 200 colleges to allow some prisoners to take college classes. Once an individual is released, eligibility limits for federal student aid may be removed.
But beginning July 1, 2023, all incarcerated students enrolled in eligible prison education programs will again qualify for the Pell Grant.
Students may lose Pell Grant eligibility if they withdraw from courses, do not maintain enrollment status or fail to continue making academic progress, which can include GPA requirements set by individual institutions.
One pitfall experts say recipients should keep in mind is lifetime eligibility, a limit on the number of Pell Grant awards students can receive over the course of their lifetimes. The amount of Pell funds students can receive is limited by the federal government to the equivalent of six years or 12 semesters of awards. The Department of Education announced this updated limitation in 2012, when the number of full-time-equivalent semesters a student could be eligible for decreased from 18 to 12.
Students are also eligible to receive a summer Pell Grant award, known sometimes as year-round Pell. As long as the lifetime eligibility limit has not been reached, students can receive up to 150% of their scheduled award in a given award year.
If a full-time student’s award is $4,000 for a given year, for example, the student would likely receive $2,000 in the fall and $2,000 in the spring. But if the student is eligible for 150% of the award, he or she might receive an additional $2,000 for the summer semester.
How to Apply for a Pell Grant
To be considered for a Pell Grant, students only need to fill out the FAFSA. The FAFSA will determine a student’s eligibility for the Pell Grant, and then financial aid officers will use the EFC number generated by the form to set the award amount.
“From the sense of hoops to jump through and steps students need to take, on the one hand it is the easiest form of aid to apply to because you just need to fill out the FAFSA,” Barnett says. “But on the other hand, we know the FAFSA can be complicated and confusing to fill out. We’ve seen time and time again that the actual application has been a stumbling block for individuals and first-generation individuals,” many of whom may be the most likely to benefit from the Pell Grant, he says.
Unlike some other grants and scholarships, funding for the Pell Grant does not run out over the course of a year. But experts still encourage students to file the FAFSA early, as other financial aid can be first-come, first-served.
Even if families or students think they won’t qualify for the Pell Grant, they should still fill out and submit the FAFSA, experts say. The FAFSA is required for all federal financial aid, not just the Pell Grant, and nearly all students who apply qualify for some form of this aid. The federal deadline to file the FAFSA is June 30, but some states and institutions have earlier FAFSA deadlines.
“Students need to reapply for financial aid each year,” says Helen Faith, director of the office of student financial aid at the University of Wisconsin–Madison. “They qualify for a Pell Grant each year, depending on their financial circumstances at that point in time. So a student may not be eligible for Pell one year, but they may qualify in future years.”
Pell Grant Aid Disbursement
A college or university will distribute the Pell Grant funds directly to the student in payments called disbursements. The institution will then be reimbursed by the federal government, Anderson says. Typically, an institution puts the Pell Grant award in the student’s account balance automatically to cover tuition, fees, and room and board.
If there are additional funds left over, a student will be issued a credit. The form of this credit varies depending on the institution. The credit can be used to pay for books, up to a certain amount, and other educational expenses.
Students can expect to receive their Pell Grant award at some point during the semester payment period. Exactly when and how a student is paid depends on the institution. Colleges may pay students as early as 10 days before the first day of classes, or they may allocate monthly payments.
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Update 11/16/22: This story was published at an earlier date and has been updated with new information.