How a Federal Pell Grant Can Make College More Affordable

In this article...
  • Pell Grants put a college education within reach of low-income students of all ages. Here's what you need to know about this important federal aid program.
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While students of all ages aspire to go to college, rising costs can put a postsecondary education out of reach for many.

Less than 1 in 10 students from the lowest income quartile graduate with a bachelor’s degree by the time they're 24, compared to nearly 8 in 10 students in the top quartile, according to the U.S. Department of Education.

The Federal Pell Grant Program is an essential source of financial aid that helps low-income students pay for college, whether they're recent high school graduates or older students returning to school.

Higher education can swing the door open to many opportunities, including a variety of careers, improved earning potential and personal growth.

Pell Grants are the country’s largest source of free federal assistance for postsecondary studies. In 2015-16, the program provided $28.5 billion in funding to 7.7 million students, or nearly 4 out of every 10 undergraduate students.

Read on to learn how Federal Pell Grants help make a college education more affordable.

What Is a Pell Grant?

Low-income students are less likely to attend college than their peers, even when academic ability is considered.

In 1972, Senator Claiborne Pell sponsored legislation creating direct aid for students demonstrating financial need. Since that time, more than 100 million Pell Grants have been provided to help students pay for college.

Pell Grants help to bridge the gap between low-income students and those with greater financial means.

According to the Center on Budget and Policy Priorities, Pell Grants:

  • Increase college enrollment
  • Reduce drop-out rates
  • Improve student outcomes and college completion
  • Reduce the time it takes to graduate
  • Enable students to focus more on their studies

Who’s Eligible for Federal Pell Grant Funds?

Pell Grants are based on need and unlike federal student loans, they do not need to be repaid. You may be an eligible student if you:

  • Have not earned a bachelor’s, graduate or professional degree
  • Are enrolled in an undergraduate program, or in some cases, a post-baccalaureate program that leads to teacher certification or licensure
  • Demonstrate exceptional financial need

Check to see if you are eligible here.

How Is the Grant Award Calculated?

Award amounts are calculated according to a formula. The calculation takes into account:

  • Cost of Attendance (COA) for your program and school
  • Expected Family Contribution (EFC), which is based on your family’s income, assets and benefits

The difference between the COA and EFC is your financial need.

The final grant a student receives depends on financial need, attendance status (full-time or part-time), the size of the student's family, how many other students the family is supporting through college and other factors.

How Much Can I Receive?

The Pell Grant limits change each award year. The Pell Grant for July 1, 2020 to June 30, 2021 is capped at $6,345. Visit the Federal Student Aid website for the most up-to-date information.

Most students receive less than the maximum because of part-time studies or family income. In 2018-19, the average grant was $4,160, according to research from the College Board.

It's important to keep in mind that the award does not cover all of your costs. In 2019-20, the maximum Pell Grant covered 59% of the average published tuition and fees at public four-year colleges. When room and board is taken into consideration, this figure drops to 28% of average costs.

Pell Grants are available for a maximum of 12 semesters or the equivalent.

How to Apply for Federal Student Aid

The first step to applying for any financial assistance from the federal government is to complete the Free Application for Federal Student Aid (FAFSA).

Information you provide on the FAFSA determines your eligibility for any federal student aid programs. Many states and colleges also use this information to award other grants, loans and scholarships, so be sure to complete the application each year and make sure you meet all application deadlines.

How Do I Get My Grant?

Once you've submitted the FAFSA, colleges that have accepted your application for enrollment will provide you with details about the financial aid you’re eligible to receive. This includes Pell Grants as well as other grants, loans and scholarships you may receive from the school or state.

The total financial aid is paid through any eligible school you choose to attend. Typically, the grant is applied toward tuition, fees and campus living costs. Remaining amounts are disbursed to you for books and other living expenses.

Additional Resources

There are immense benefits to a higher education, but planning where you want to study and how to pay for it can be daunting.

Visit the Federal Student Aid website for comprehensive information about choosing a college, understanding costs and federal and non-federal financial aid programs.

You can also contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) if you have questions about completing the FAFSA or need other information about financial support.