Your Complete Guide to Federal Pell Grants

Matthew Frankel, CFP, The Motley Fool

Want free money for college? A Federal Pell Grant can help.

Man with handful of money

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While government loans are valuable for college students, money that you don’t have to pay back is even better.

The Federal Pell Grant program is a need-based program that offers eligible students as much as $6,195 each year in free money to help pay for tuition and other costs of education. Applying is easy, and you could receive a grant for up to six years of school.

With that in mind, here’s what you need to know about the Federal Pell Grant program and how it could help you pay for school.

What is a Federal Pell Grant?

A Federal Pell Grant is a form of federal student aid. It’s a need-based program, and only students with demonstrable financial need qualify for Pell Grants. Academic factors like high school GPA play no role in Pell Grant eligibility. But you’ll need to meet minimum academic standards to continue receiving a Pell Grant in subsequent years of school.

It’s important to emphasize that a Pell Grant is not a student loan. Grants are money that is given to you and doesn’t need to be paid back. (Though you have to pay back all or part of your grant if you switch to part-time school or drop out.)

Federal Pell Grant eligibility requirements

In order to be eligible for a Pell Grant, students must meet a few criteria:

  • You must be a U.S. citizen or an eligible non-citizen (this generally means you’re enrolled in an eligible degree program).
  • You must be an undergraduate student. You can enroll on a full- or part-time basis, but part-time students receive smaller grants than full-time students. It’s worth mentioning that there’s no half-time enrollment requirement -- students can be enrolled very part-time and still potentially qualify.
  • You must not be incarcerated.
  • You must be pursuing your first bachelor’s degree or be enrolled in a post-baccalaureate teacher preparation program. In other words, Pell Grants are not available to students pursuing a second degree or who are enrolled in most graduate programs.
  • You must have a financial need, as calculated by the government based on your expected family contribution and your school’s cost of attendance.

How much money could you get with a Federal Pell Grant?

The short answer is “it depends.” The government determines a maximum Pell Grant award for each school year. For the 2019–20 school year, the maximum Pell Grant is $6,195.

The actual amount you’ll get is determined by your financial need. The minimum Pell Grant you can receive is 10% of the maximum award amount. For the 2019–20 school year, eligible students will receive at least $619.50.

Financial need is based on several factors, including

  • the cost of attendance at your school,
  • your expected family contribution,
  • your enrollment status (full- or part-time), and
  • whether you plan to attend school for the entire academic year or not.

There are tables that determine your Federal Pell Grant eligibility based on these factors. If you want to know how much you could get, check them out. It’s important to mention that your Pell Grant amount isn’t affected by any other student aid you qualify for.

The financial aid letter you receive from your college or university will have details of all financial aid you’re eligible for -- including Pell Grants.

It’s also worth mentioning that the grant amounts above are based on fall and spring enrollment. You can receive as much as 150% of your grant award each year if you enroll in classes during the summer semesters.

Students are eligible for Pell Grants for a maximum of 12 semesters or six years. Any extra funds you receive during summer semesters count toward this limit. In other words, the maximum you can get is limited to 600% of your Pell Grant award for one academic year.

How do you get the money after you’re approved?

Like other forms of financial aid, Pell Grants are paid directly to your school. While the exact process varies, financial aid funds received by your school are typically first applied to any outstanding charges like tuition and fees. If there’s any left, the remainder is generally paid to you.

Is it just for one year, or do you get Federal Pell Grants each year you’re in school?

You can receive Pell Grants for as many as six academic years. To stay eligible, you must submit a new Free Application for Federal Student Aid (FAFSA) each year and the information in your FAFSA must confirm eligibility for the grant.

To continue receiving Pell Grants and other forms of federal student aid, you need to make satisfactory academic progress. That is, your grades and the classes you complete must move you towards graduation. Your college or university has its own definition of satisfactory academic progress, including GPA requirements and how many credit hours you need to earn per academic year.

How to apply for a Federal Pell Grant

There’s no Federal Pell Grant application. Students apply for Pell Grants by submitting the FAFSA. While the FAFSA deadline isn’t until the school year is nearly over, it’s a smart idea to fill it out as early as possible. Aid is awarded on a first-come basis. The application is released on Oct. 1 of the calendar year before the academic year.

You want to make sure your federal financial aid is determined before your classes begin, but states and individual colleges often have their own financial aid programs with earlier deadlines.

As a final point, it’s important to mention that the FAFSA isn’t something you do just once when you start school -- you need to submit a new FAFSA each year to be eligible for federal student aid, including Pell Grants and federal student loans.

Free money for millions of students

Federal Pell Grants cost nothing to apply for and can give you thousands of dollars in free money towards your education. If you submit a FAFSA and qualify, a Federal Pell Grant award could help reduce the amount you need to borrow or pay out of pocket for your education.

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