What is the Pell Grant?

The Pell Grant is a form of U.S. student financial aid that comes in the form of a grant. Unlike loans, grants are basically a form of need-based cash award that can be used to pay for college costs.

The Pell Grant is named after Senator Claiborne Pell and was originally called the Basic Education Opportunity Grant. The Basic Educational Opportunity Grant emerged in 1972 from the Higher Education Amendments to the Higher Education Act (HEA) that was passed by Congress in 1965 to assist and improve higher education in the United States and was the initial legislation to benefit lower- and middle-income students. In 1980, the Basic Educational Opportunity Grant was renamed the Pell Grant in honor of Senator Pell, who reformed the HEA into what is more or less the Pell Grant that exists today.

The Pell Grant is given to undergraduate students with extreme financial need; usually those coming from low-income families. Generally, the Pell Grant program is the largest financial federal student aid program available to undergraduate students. It is generally considered as the basis or foundation of a student's financial aid package. Other forms of financial aid are then added to the award amount from the Pell Grant to pay for the cost of attendance of a student in college.

What is the Pell Grant Award Amount?

For the 2022-2023 award year, which is July 1, 2022, to June 30, 2023, the maximum 2022-2023 Federal Pell Grant awards amount is $6,895. This is an increase of $400 over the 2021-22 academic year.

The actual amount a student will be awarded from the Pell Grant is computed based on the Expected Family Contribution (EFC), the Cost of Attendance (COA) determined by the school for the specific program the student is attending, the status whether the student is a full-time or part-time student, and whether the student will attend school for a full academic year or less.

What is the Expected Family Contribution?

The EFC is an index number that is calculated according to a formula established by law.

The family's taxed and untaxed income, assets, and benefits (such as unemployment or Social Security benefits) all could be considered in the formula.  

Also considered are the family size and the number of family members who will attend college or career school during the year.

What is the Cost of Attendance?

The COA is basically the amount it will cost the student to go to the college he/she is entering. This includes tuition and fees, cost of room and board (or living expenses for students who do not contract with the school for room and board or live within school campus), the cost of books, supplies, transportation, loan fees, and miscellaneous expenses (including a reasonable amount for the documented cost of a personal computer), and other expenses needed to complete the school year.

Are There Any Limits to How Much Pell Grant a Student Can Receive?

There is also a limit by law as to how much the total amount of Pell Grant funds a student can receive. The amount of Federal Pell Grant funds a student may receive over his or her lifetime is limited by federal law to be the equivalent of six years of Pell Grant funding. Since the amount of a scheduled Pell Grant award that a student can receive each award year is equal to 100%, the six-year equivalent is 600%. The 100% per year scheduled award is based on the EFC and COA of the student, assuming the student will also be enrolled full-time (2 semesters) during that award year. Sometimes, a student can receive up to 150% of the award amount if he or she is enrolled for 3 semesters within that award year.

To keep track, the government calculates the student's Lifetime Eligibility Used (LEU) percentage while they are receiving Pell Grants. They can see how much award money they have left to go by logging into their My Aid account on the Department of Education's Federal Student Aid website. A student will have a My Aid account when the student completes their FAFSA, which is a requirement to receive the Pell Grant and any other form of federal student financial aid.

A student's eligibility for Pell Grants ends when they receive their degree, or once they reach the maximum 600% award amount they are eligible for.

 Who Is Eligible to Get the Pell Grant?

According to the official Federal Student Aid website, "Federal Pell Grants usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate, or professional degree. (In some cases, however, a student enrolled in a post baccalaureate teacher certification program might receive a Federal Pell Grant.) You are not eligible to receive a Federal Pell Grant if you are incarcerated in a federal or state penal institution or are subject to an involuntary civil commitment upon completion of a period of incarceration for a forcible or nonforcible sexual offense."

Looking deeper, here are additional considerations for eligibility:

The student will have to process the FAFSA for every year he or she wants to receive Pell Grant award money.

What is the Pell Grant Application Process?

How Do Students Receive the Pell Grant Award Money?

Generally, the college or school the student is attending is the one who determines and distributes the Pell Grant funds. These are called disbursements and may be paid directly to the student or applied to school costs, or both.The federal government then reimburses the school.

Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.

Schools that have some sort of school term schedule (semester, trimester or quarter) should provide the disbursements once per term. If the schools do not follow such a schedule, then the school should provide the disbursement at least twice a year.

Get More Free Student Financial Aid in Addition to the Pell Grant

The Pell Grant is basically not enough to cover the entire cost of attendance for college, especially since it is based on the student's financial need or status. With this in mind, any student should definitely try to go for more free student financial aid and try to cover as much of his or her college expenses as possible.

Aside from grants from the federal government, which are all financial or need-based, scholarships are free money that students can get and use towards their college costs. Use the Ultimate Scholarship Success Pack to either help get started with looking and applying for scholarships or find ways to apply for scholarships faster and overcome obstacles in getting them. If further assistance with scholarships, preparation for college and college applications, including completing the FAFSA and looking for financial aid, is needed, browse through Hive College Buzz's services and scroll to the bottom of the page where you can schedule a free 20-minute college admission and scholarship strategy session with Christen Arafeh, an expert in college admissions and scholarships.