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What Is a Pell Grant?

By Kayla McCormack · October 04, 2021 · 7 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

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 2021-2022 school year’s maximum being $6,495.00.

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.

Applying for a Pell Grant

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.

Maintaining Eligibility for a Pell Grant

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.

Student Loans

Student loans are borrowed funds that need to be repaid, typically with interest. There are both federal student loans that the government offers, and private ones offered by financial institutions.

Federal Student Loans

Federal loans are offered to students based on data included in the FAFSA. 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 after the grace period, which is six months after you graduate or your enrollment drops below half-time.

Private Student Loans

Private student loans may have a fixed or variable interest rate. Different lenders may have different terms and rates and they’ll likely evaluate a potential borrower’s credit score and history, among other factors, to make their lending decision.

Recommended: Private vs Federal Student Loans

Scholarships

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.

Grants

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.

Understanding Expected Family Contribution

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.

There are many factors that go into financial aid decisions. Avoid assuming that 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 2021-2022 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.

Additional Pell Grant Funding for Military Service in Afghanistan or Iraq

Students 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 qualify 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.

Iraq and Afghanistan Service Grant

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

The FAFSA, which is required to qualify for the Pell Grant, is also required for other forms of financial aid. In your financial aid award, you’ll also be able to review any scholarships, grants, work-study, or federal student loans you may have qualified for.

Generally, scholarships, grants, and work-study are relied on before student loans. Then Federal student loans, particularly Direct Subsidized Loans which, as mentioned, doesn’t accrue interest until after a student graduates or drops below half-time enrollment.

Private Scholarships

Thoroughly investigate scholarship opportunities, as well as grants. 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.

Part-Time Job

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.

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.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Private loans, as mentioned, are offered by financial institutions. 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. Private student 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.

There are also downsides to borrowing private student loans. They don’t have the loan forgiveness programs that are available with federal student loans, or income-driven repayment plans. This means that private student loans are generally considered only after all other options have been evaluated.

If private loans may make sense for you, shop around to compare lenders and find the option that is best for you. To help determine what your payments might be with private loan funding, you can use this student loan calculator to get an idea.

The Takeaway

Pell Grants are awarded to students who exhibit exceptional financial need. As mentioned, Pell Grants do not typically need to be repaid. The amount awarded to each student may vary based on their personal financial circumstances and the maximum award for the 2021-2022 school year is $6,495.00.

If a Pell Grant and other sources of aid aren’t enough to pay for college, some students may consider private student loans. As mentioned, private student loans lack the benefits afforded to federal student loans, and are typically considered only after all other sources of funding have been evaluated.

If you’re interested in private student loans, take a look at SoFi’s options. With SoFi, 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.

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


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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 SoFi.com/eligibility 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.

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