The Pell Grant
Free Money for College
The U.S. Department of Education provides student loans and grants that are designed to help offset the unwieldy costs of college tuition in the United States.
The Pell Grants stand separately and uniquely from such federal student loans as the Stafford, Perkins and PLUS loans because they do not require repayment.
A loan is an amount of money given to a borrower for a specific amount of time for a specific purpose, such as tuition costs.
Borrowers on student loans must sign promissory notes that legally bind them to repay X amount of dollars plus interest. In comparison a student grant is a monetary gift with no strings attached as far as repayment goes.
History
In 1972 what we now know as the Pell Grant was introduced as the Basic Educational Opportunity Grant. The grant's intent was to support the educational pursuits of low-income students. In most cases, students from middle to upper income households go on to earn a college degree, while only half those from lower income households do the same. Because of this the Pell Grant program has helped many millions get a leg-up in their pursuit of a college degree. However, statistics are showing that the Pell Grant is helping fewer and fewer students as federal student loans become more ubiquitous and commonplace.
Criteria
The Pell Grant is awarded to students who can prove the most financial need. Students applying for the Pell Grant must complete paperwork to determine their Estimated Family Contribution (EFC) for college. The EFC is a number assigned to the borrower's application that is determined based on disclosed household financial information. If the applicant meets the criteria for receipt of a Pell Grant the award amount is based on:
- the EFC number
- whether the student is attending the college program on a full-time or half-time basis
- how much of the academic year the student plans on participating in scholastic programs
The Pell Grant is awarded to millions of eligible students annually. Most of them come from families where household incomes fall below $20,000 a year. Considering the fact that a private college tuition averages upwards of $20,000 per year and a public university or college tuition averages half the amount, it is very easy to see the financial challenges faced by lower income students.
Awards
The Federal Pell Grant program has born the brunt of various federal funding cuts over the years, so award amounts may vary. In recent years maximum Pell Grant awards have been about $4,000. You can apply for the Pell Grant by filling out the Free Application for Federal Student Aid (FAFSA).
Beyond the Pell Grant
A recipient of a Pell Grant may still apply for other federal and private loans. It's no secret that most of the federal loans only offer a minimal financial leg up to college-bound students. Most students carry multiple federal and private student loans in order to best manage college expenses.
