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What is a Pell Grant?

December 30, 2019 · 9 minute read

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What is a Pell Grant?

A Pell Grant is a type of federal funding that’s awarded to eligible undergraduate students who have exceptional financial need, and is provided to help pay for their education. In general, unlike a loan, Pell Grants usually don’t need to be repaid. The maximum amount that you can receive varies each year, with the 2019-2020 school year’s maximum being $6,195.00.

Factors that play a role into what you might receive include your Expected Family Contribution (or EFC—more about that later in this post), the cost of attending your specific school for your specific program, whether you’ll be attending full-time or part-time, and whether you intend to attend school for the entire academic year.

If you believe you might qualify, then step one is the same as for every type of federal funding for students—to fill out the Free Application for Federal Student Aid (FAFSA®). Here are step-by-step tips for filling out the FAFSA. Note that you’ll need to fill out this form every year that you’re attending school to apply for federal aid, including but not limited to the Pell Grant.

If you receive Pell Grant funding, then your school can apply these funds to your school costs or pay you—or use a combination of these two methods.

To maintain your eligibility, you’ll need to stay enrolled in your undergraduate program. Additional Pell Grant requirements, among others, include that you need to either be a U.S. citizen or an eligible non-citizen.

Except in rare instances, you’ll need to have a valid Social Security number and, if a male, you must be registered with Selective Service. You also must be enrolled or accepted for enrollment in an eligible educational program.
This program is available to qualifying students for 12 semesters.

Loans vs. Scholarships vs. Grants

Before taking a deeper dive into federal Pell Grant eligibility, it can help to delve into the differences among these three types of funding. (If you already feel confident about the differences among loans, scholarships, and grants, then you can skip to the section titled “How Do Pell Grants Work?”)


In short, student loans are funds that have been borrowed and need to be paid back, typically with interest. There are both federal student loans that the government offers, and private ones offered by some financial institutions.

Loans can have fixed interest rates or variable ones, with different terms and borrowing limits. Depending upon the loan type, what you’re offered could be based upon your credit score and other financial factors (private loans) or the FAFSA information you supply (federal loans).

Some federal student loans are unsubsidized, while others are subsidized. With an unsubsidized loan, the interest begins accumulating as soon as funds are dispersed. So, while you’re in school, even if you aren’t making payments yet, interest is accruing.

With a subsidized loan, though, the government will pay your interest until you graduate or drop below half-time status.

You usually need to start paying back federal loans six months after you graduate or your enrollment drops below half-time.


There are thousands of scholarships available to help students finance their college education. Some are based on financial need, others on merit, and sometimes both. The beauty of scholarships is that, unlike loans, they usually don’t need to be repaid. It can take some time to find the right scholarships for your situation.

Your high school counselor or college advisor may be able to help, and there are scholarship databases that you can search. Scholarships come with different requirements and different deadlines, so it typically helps to start early.


Like scholarships, grants typically don’t need to be paid back. They can be obtained from a variety of sources, including from state governments, the federal government, your university, and private/non-profit organizations.

To receive a grant, you often need to meet financial criteria, and this kind of funding is usually based on financial need. And, this brings us full circle to a popular type of grant for college students today: the federal Pell Grant.

How Do Pell Grants Work?

To become eligible, you must fill out the FAFSA. If it’s determined you’re an undergraduate student with exceptional financial need—and you haven’t yet earned a bachelor’s degree (or a graduate or professional one)—then you may qualify for this grant funding.

Because each school that participates in the federal Pell Grant program receives enough funding annually to pay the full amount of Pell Grants to eligible students, if you’re eligible, you’ll receive the full amount you qualify for—and, if you qualify for other student aid, this does not have an impact on your Pell Grant eligibility.

As mentioned earlier, your Expected Family Contribution
(EFC) plays a role in what you’ll be awarded. This is an index used by college financial aid departments that allows them to calculate how much financial aid you’re eligible to receive if you attended their school. The financial aid departments make these calculations based upon information provided in your FAFSA.

Factors considered in your EFC could include your family’s:

•   taxed income.

•   untaxed income.

•   assets.

•   unemployment benefits.

•   Social Security benefits.

•   size.

members who are attending a college or career school during the academic year.

Don’t assume you won’t qualify based on what happened to someone else you know. Perhaps you’re comparing income to income, as just one example, but you may have a bigger family or more people from your family may be attending college this year.

You can see the EFC formula in depth here , along with the federal Pell Grant tables for the 2019-2020 academic year. Note that students with criminal convictions have more limited options; this doesn’t mean that aid can’t be provided, but the parameters are different and more stringent.

Sometimes, students qualify for 150% of scheduled Pell Grants, and you might hear this referred to as “year-round Pell.” That’s because, sometimes, you can also receive Pell Grant funding during the summer semester. If this interests you, you’ll need to talk to your school’s financial aid department about the requirements for this type of Pell Grant.

You may qualify for more federal Pell Grant funding if one of your parents or your guardian died in the line of duty. More specifically, you may be eligible for more funding if your parent or guardian was a:

•   member of the U.S. military who died as a result of service performed in Iraq and/or Afghanistan, post 9/11

•   public safety officer who died in active service in the line of duty.

Eligibility requirements also include that, at the time of this death, you were younger than 24 years old or were enrolled in college or a career school on at least a part-time basis. If you quality and are eligible for a Pell Grant, then your eligibility will be calculated as if you had an EFC of zero. If you’re attending less than full-time, then payments will be adjusted accordingly.

If you meet the requirements about a parent’s or guardian’s death in the military, as well as your own age and college enrollment requirements—but aren’t eligible for the Pell—you might want to investigate the Iraq and Afghanistan Service Grant .

When You Still Need More Money

After you’ve filled out your FAFSA for the year, it is typically worthwhile to make sure you’ve taken advantage of whatever loan opportunities that you quality for, especially Direct Subsidized Loans where you aren’t responsible for the interest that accrues while you’re attending college.

It also makes sense to make sure you’ve thoroughly invested scholarship opportunities, as well as grants. Although it’s not true that billions of dollars of scholarship funding goes unclaimed each year, there are opportunities out there.

To increase your chances of successfully receiving these kinds of funding, it can really help to carefully prepare to apply for them. Materials you will likely need include a transcript, personal references, and a personal statement.

You can ask a trusted adult, whether that’s a teacher, parent, or guidance counselor, to read over what you’ve written. And, although some of the scholarship or grant amounts might at first look small, multiple smaller awards can really add up.

Other ways you can help to pay for your education include working while also attending school. As part of your federal student aid, you may qualify for a Federal Work-Study program .

This program provides funding for part-time jobs that are, ideally, related to a student’s area of study or that contribute to the public good. Not everyone who gets federal financial aid qualifies for this work-study package, so be sure to check your status.

Jobs may be located on campus or off, in your college or at a governmental agency or a non-profit organization. They may even be with a for-profit employer. No matter where you’re working, you’ll typically get paid by your school at least once a month at an hourly rate. Your school will typically limit the number of hours that you can work. If this interests you, talk to your college’s financial aid office.

Note that, even if you qualify for a work-study job, you may not automatically get one. You’ll need to find and apply for one and, sometimes, they’re limited in quantity. So, investigate this option as early as you can.

If you don’t qualify for or can’t find a work-study job, you can still seek employment on your own. Colleges often provide job boards that list opportunities for employment, either on or off campus.

You can also check job sites that aren’t connected with the college, and ask guidance counselors, professors, and friends and family for leads.

No matter how you find a job, having one can help you to earn money for college while also helping you to build a resume that could prove valuable as you look for full-time employment after graduation.

Another Option: Private Student Loans

You can fill in the gap between what you can obtain with federal student loans, plus scholarships and grants, with private student loans. These loans differ from federal loans in many ways, with federal ones having fairly static criteria, including fixed interest rates, multiple plans for repayment, and options for loan forgiveness. To become eligible for federal funds, you need to fill out the FAFSA annually.

Private loans, in contrast, are offered by banks, credit unions, and other private lenders. To request funds, you fill out an application, just like you might for a car loan, a mortgage, or a personal loan. To qualify, the lender will typically review your income and your credit score—and those of your co-signer, should you need one—among other financial factors.

Private lenders set their own criteria for loan approvals, as well as their own terms, including interest rates, term lengths, and repayment plans. So, one private lender may vary from another in the way their program does or does not fit your needs or qualifications.

Private loans can come with multiple benefits and, in many cases, they can provide the funding that would ultimately make a difference between being able to pay tuition—or not. They can be ideal to address funding shortfalls since you can apply for them any time of the year. (Because it can take time to complete the application process, be sure to plan ahead.)

This type of loan can give you more control over interest rates, whether a loan is fixed or variable, and with term lengths, since private lenders have some flexibility in what they offer. So, you can compare lenders and choose what’s best for you.

Typically, private student loans don’t have fees attached to them, such as origination fees or prepayment penalties, but you’ll probably want to check any fine print to verify that.

There are downsides, as well, to private student loans. One is that lenders sometimes require a co-signer since most students don’t yet have a good enough income or credit score to qualify on their own.

You may find yourself paying more with private loans because interest rates are partially based upon how big a credit risk you might be and, while private loans may give you more options with term length, they don’t have the loan forgiveness programs that are available with federal student loans, or income-driven repayment plans like the government offers.

Here’s one more downside. These loans are typically not able to be discharged if a borrower files for bankruptcy. This is different from what happens with other consumer loans, like credit cards or lines of credit.

So, should you take out private student loans? There is no one right answer for everyone and, if you decide to apply for private funding, it’s important to review your options. What interest rates are being offered? Terms? Are there fees? If so, what kind? Does the lender offer cosigner release? Loan deferment?

To help determine what your payments might be with private loan funding, you can use this student loan calculator to get an idea.

Private Student Loans at SoFi

In the interest of full transparency, SoFi recommends that you explore your federal options thoroughly before applying for private student loans. If you decide that private loans are right for you, SoFi simplifies the process to make paying for school stress-free.

With SoFi private loans, the entire process takes place online and you can add a cosigner to your application in just minutes. There are no fees (as in no origination fees, no late fees, and no insufficient fund fees), and no fuss. At SoFi, you can repay your way, choosing from flexible repayment options to help you find the loan that fits your budget.

Undergraduate student loan repayment options include:

•   Deferred: Start paying principal and interest payments six months after you leave school. With this option, there are no payments while you’re attending school, although it’s the highest overall cost option.

•   Interest only: If you choose this, you’ll only pay interest payments while you’re in school. When you make this moderate payment while attending school, you’ll help reduce the overall cost of the loan.

•   Partial: Here, you’ll pay a low monthly payment while you’re attending school. This is the lowest payment option while you’re in school and it can help reduce some of your costs.

•   Immediate: Start paying principal and interest payments right away.

Explore what SoFi has to offer in private school loan funding today.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see


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