Is a Pell Grant a Loan that Needs to be Repaid?

Whether you’re applying to college for the first time or returning to finish your degree, you may be wondering what types of financial aid are available to help you pay for your education. College is becoming increasingly necessary in order to find a job and move up in a career. Additionally, the price of a college education is increasing. Students usually pay for school through a combination of loans, scholarships, family contributions, and grants, like a Pell Grant.

What is a Pell Grant? A Federal Pell Grant is monetary aid supplied by the U.S. federal government to qualifying students who are enrolled in participating postsecondary institutions. Students must meet basic requirements, the most important of which is financial need. Over 5,400 colleges participate in the Pell Grant program. These grants have been in existence since 1972, due in large part to the efforts made by Senator Claiborne Pell. Originally named the Basic Educational Opportunity Grant, Pell Grants are distributed to students through their college, and colleges are given enough grant money to disseminate the awards to all qualifying students.

How Much Can I Qualify For?

A common question asked of financial institutions is, “Do you have to pay back a Pell Grant?” As with all grants, Federal Pell Grants do not need to be repaid. The maximum allotment per student in the 2014-2015 academic school year was $5,730. Certain variables determine how large of a grant a student qualifies for. How much money a student can receive is dependent upon a number of factors, including:

  • Financial need
  • The school’s cost of tuition, fees, and housing
  • Whether a student’s enrollment status is full- or part-time
  • How long the student intends to be in school (for one year or less than one year)

The U.S. Department of Education takes all these factors into consideration when determining how much money a student qualifies for. Because Pell Grants are the highest-level grants available, they don’t affect eligibility for other types of financial aid. Students are able to use their grant money to help pay for tuition, fees, housing, textbooks, and any other expenses related to their educational needs.

Who Qualifies For a Pell Grant?

Pell Grants are awarded to undergraduate students who have not yet received a bachelor’s degree in any subject. Occasionally, certain graduate students can qualify for Pell Grants when pursuing a teaching credential. Pell Grant applicants must be U.S. citizens or eligible noncitizens (such as permanent residents) in order to qualify. They must also not be in default on any federal student loans, and not owe a refund for grants previously distributed. They also cannot receive the award from more than one school at a time, not be presently incarcerated, and males must be registered with Selective Service. According to The College Board, the makers of the SAT, “Over one-third of undergraduate students received a Pell Grant in 2013-14.”

How is Financial Need for the Pell Grant Calculated?

Students apply for Pell Grants when they fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA. Students list their financial information, as well as that of their parents if the students are 23-years-old or younger. Parental information isn’t necessary in certain circumstances, but these are very rare. The circumstances include being a ward of the court, or being officially emancipated from one’s parents through a court of law. Types of financial information needed on the FAFSA are:

  • Yearly income
  • Stocks and bonds
  • Savings
  • Property

Parents will also list additional information that provide number of dependents and current tax information.

The FAFSA calculates eligibility for the Pell Grant through a process called Expected Family Contribution (EFC). The financial information listed above helps determine what the government feels a family should be able to contribute to their child’s educational expenses. Anything over this amount is factored into the award.

When Should I Apply?

Students should apply for financial aid after January 1st of each year that they plan to attend school. The application process can begin during the student’s senior year of high school, and the student then reapplies each year thereafter. Students are eligible for the Pell Grant for up to six years of schooling. The FAFSA is available both online and by mail. The process may take time, so it’s a good idea to start filling it out way before the deadline, which is June 30th of each year. Those who apply well before the deadline are able to receive their award letters by late April through May.

Pell Grants are necessary for many incoming and current students. These grants enable students to pay for important expenses that then allow them to pursue their college education. When students then earn their degrees and become taxpayers themselves, they essentially pay back their grants through their taxable income. This process helps support the next round of students who need extra support in order to get their own education.



Federal Student Aid: An Office of the U.S. Department of Education (

Big Future: By The College Board (

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Do You Have to Pay Pell Grants Back

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Updated Sep 14 2016 About content Print Topic