What is a Pell Grant? Am I Eligible for a Pell Grant?

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Jocelyn Segoviano
Jocelyn Segoviano
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Jocelyn Segoviano is a freelance writer specializing in personal finance topics. With a passion for helping individuals navigate their financial journeys, she has been providing insightful advice and practical tips to readers for over years.

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Daniel Kahn
Daniel Kahn
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Daniel is the co-founder and COO at Sparrow. Daniel is responsible for the day-to-day operations of a company, working closely with other members of the executive team to develop and implement strategies to support the growth and success of the company.
Daniel was a 2023 Forbes 30 Under 30 lister in the Education category.  Daniel was born and raised in Raleigh, North Carolina and graduated from Duke University in 2020.
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Camden leads Sparrow’s business operations – everything from product management to business analytics. After graduating Cum Laude from Duke University where he studied Civil Engineering, Camden worked as a Consultant for A.T. Kearney where he worked in their Strategic Operations practice. With a strong background in analytics, Camden strives to deliver data-driven conclusions and insights.

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Updated
February 1, 2024

The government gives out billions of dollars in aid each year, some of that going toward students who received the Federal Pell Grant. But what is it? And how does it work?

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What is the Pell Grant? 

The Pell Grant is one of many federal grants the government provides to help students pay for their college expenses.

Who is Eligible for the Pell Grant? 

Usually, undergraduate college students who demonstrate financial need are eligible for this grant. You can’t have already earned a bachelor’s degree or higher. However, in some cases, students working toward a post-baccalaureate degree in teaching may still be eligible to receive the Pell Grant. Talk to your school’s financial aid office for more information on this. 

Other factors such as your enrollment status and how long you’re going to be in school also determine your eligibility.

How Much is a Pell Grant? 

The full amount of the Pell Grant currently is $6495. This amount is subject to change each school year, but it’s usually around $6000. Keep in mind, though, that the amount you will receive will depend on both your cost of attendance (COA) and your estimated family contribution (EFC). The lowest you’ll ever receive is 10% of the full amount, so about $650 based on the current numbers. In special cases, students whose parent(s) or guardian(s) died in military service in Iraq or Afghanistan after 9/11 may be able to receive more money. Check with your school’s financial aid office for more information if you think this applies to you.

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Do You Have to Pay Back the Pell Grant? 

Generally, no. Since it’s a grant, you won’t have to pay it back. There are some exceptions to that rule: 

If You Drop Out 

Some students receive the Pell Grant to help them pursue a certain program. If this is your case and you end up dropping out, then you’d have to repay.

If Your Financial Need Changes 

Receiving other scholarships and grants after accepting the Pell Grant reduces your need for financial aid. In that case, you might have to pay back any money that was already given to you.

If Your Enrollment Status Changes 

If you switch from full-time to part-time, that would also be grounds for having to repay the grant money. 

Don’t worry too much about this though. If you do have to repay the grant, your school will notify you. From there, you’ll have 45 days to either pay it back in full or enter into a repayment arrangement.

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How and When to Apply for a Pell Grant

To be able to receive a Pell Grant, fill out the FAFSA form as soon as it’s available. Be sure to repeat this every year you’re in school to continue to receive the grant.

Pell Grant Disbursement 

Usually, your college will receive your grant funds. They’ll automatically apply them to any school-related costs you have. You’ll receive any leftover money in payments called disbursements. Schools are required to give out at least two grant disbursements per year. Most schools typically do this once per term. 

Another important detail is that the funds can only be used toward one school. For example, if you’re dually enrolled, you’ll only be able to use the money to help pay for the costs of one of the schools.

Additionally, you can only receive the Pell Grant for 12 terms or until you receive a bachelor’s degree. Your Pell lifetime eligibility used, or LEU, determines how many terms you have left. You can check this by logging into your Financial Student Aid account and going to the My Aid tab.

Other Federal Educational Grants 

There are other educational grants that are a part of federal student aid. Here’s a quick overview of them: 

Federal Supplemental Educational Opportunity Grant (FSEOG) 

This grant is usually awarded to undergraduate students who have exceptional financial need and have not earned a bachelor’s degree or higher. The award amount can range anywhere from $100 to $4000 a year. It is important to note that not all schools participate in this. If your school does, they’ll only receive a set amount of money to give out to eligible students. Pell Grant recipients have first priority to receive the money. Because of this, be sure to fill out your FAFSA as soon as it’s available.

Iraq and Afghanistan Service Grant 

This grant is usually available to students whose parent or guardian was a part of the U.S. Armed Forces and died as a result of military service in Iraq or Afghanistan after 9/11. You must have been either under 24 years of age or enrolled in college at least part-time at the time of their death. You also must be ineligible to receive the Pell Grant on the basis of your EFC. You do, however, have to meet the rest of the requirements for a Pell Grant. Because of the Budget Control Act of 2011, the award amount is currently about $6124 for grants disbursed between October 1, 2021, and October 1, 2022. Normally, the maximum award amount is the same as the Pell Grant.

Teacher Education Assistance for College and Higher Education Grant (TEACH)

This is usually for undergraduate, post baccalaureate, or graduate students who are enrolled in a TEACH Grant-eligible program. You have to agree to teach in a high-need field for 4 years at an elementary or secondary school that serves low-income students. Typically, you have to complete this service within 8 years of finishing your program. Failure to do so will turn your grant into a direct unsubsidized loan. As a result of the Budget Control Act of 2011, the current award amount is about $3772 for grants disbursed between October 1, 2021, and October 1, 2022. Normally, the grant can provide up to $4000 per year. 

All of the grant awards are subject to change each year.

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Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.

3 – Autopay Rate Reduction

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.

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Student Loan Origination (Private Student Loan) Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.36% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.87% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

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*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 08/25/2022. Variable interest rates may increase after consummation.

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This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 3/07/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 08/25/2022. Variable interest rates may increase after consummation.

This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 3/07/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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Final Thoughts from the Nest

A Pell Grant is a great way to get money for school, especially if you’re in a tough financial situation. The best part is you most likely won’t have to pay it back. So, be sure to fill out the FAFSA as early as you can to increase your chances of getting some stress-free money.

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