gold piggy bank

by Michelle Richardson, former Assistant Vice President at Chase Student Loans

I have been asked this question multiple times over my years of counseling and educating families on available financial aid resources. Every student and parent would prefer grants to student loans, as grants do not need to be paid back. Let me take this opportunity to explain what a Pell Grant is and how students qualify for them.

The Pell Grant is free money that the U.S. federal government provides to eligible students to assist them in paying for college. Pell Grants date all the way back to 1965 when they were created by the Higher Education Act of 1965, and are named after U.S. Senator Claiborne Pell of Rhode Island. Pell Grants are awarded to students who, among other qualifications, are U.S. citizens or permanent residents, are enrolled in an undergraduate degree program, and who display exceptional financial need.

“What is exceptional financial need?” you may ask.

Whether or not you demonstrate exceptional financial need is determined when you complete the Free Application of Federal Student Aid (FAFSA). Colleges use a standard formula to evaluate the financial information provided on the FAFSA to determine your family’s Expected Family Contribution (EFC). To be eligible for a Pell Grant for the 2020-21 school year, your EFC can be no more than $5,711.  Curious what your EFC might be?  Try this EFC Calculator. The maximum Pell Grant award for students with a $0 EFC is $6,345 for this academic year. Awards decrease from there as EFCs rise (up to the maximum $5,711) or college costs decrease.

In short, a Pell Grant is a monetary award for college, provided by the federal government, that does not need to repaid. In order to get one, the student must:

  • Be an U.S. citizen or permanent resident;
  • Not be incarcerated;
  • Enrolled in an undergraduate-level program at an institution that participates in Federal Student Aid Programs;
  • Complete the FAFSA annually; and
  • Demonstrate exceptional financial need.

Each college you apply to will determine your Pell Grant eligibility and include any award amounts in your financial aid award notification. And if you don’t qualify for a Pell Grant, don’t be alarmed! State governments and colleges themselves often award their own grant funding to students with EFCs well over the Pell maximum.  Completing the financial aid application process will get you in the running for all federal, state, and college-based aid programs—including the Pell Grant and beyond!

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Written by Michelle Richardson
Michelle Richardson is a college finance expert at College Coach. Before joining College Coach, she was a Senior Manager of Student Success at Student Connections and the Assistant Vice President at Chase Student Loans. Visit our website to learn more about Michelle Richardson.