Pell Grants

Federal Pell grants are need-based gifts to college students who come from low-income families. They are funded by the U.S. government and distributed by individual schools. This type of financial aid is available only to undergraduate students and those working on certain postbaccalaureate teacher certification programs. Eligible students can receive Pell grants for a total of 12 semesters.

While Pell grants are important in making higher education attainable for lower-income students and families, they no longer cover as much as they used to. Politicians are looking for ways to make college more affordable, either by increasing funding for the Pell grant program or by curbing annual tuition hikes.

Qualifying for and Receiving Pell Grants

The maximum Pell grant amount for the 2012-13 school year was $5,550, but students can receive smaller amounts.

If you are eligible for a Pell grant, your grant amount is based on the following criteria:
  • Your financial need
  • Your school’s cost of attendance
  • Whether you are a full-time or part-time student
  • Whether you plan to enroll for a full academic year or less

Your financial need is based solely on the results of your Free Application for Federal Student Aid (FAFSA). You do not need to complete any additional applications for Pell grants.

To determine need, the FAFSA looks at the following:
  • Your income
  • Your assets, if you’re independent
  • Your parents’ incomes and assets if you’re dependent (students who receive Pell grants typically have family incomes below $20,000)
  • Your family’s household size
  • The number of family members (excluding your parents) currently attending college

If your school plans to award you a Pell grant, it will notify you in writing to tell you how much you’ll receive, as well as how and when you can expect to receive it. Your school will send funds to you at least once per semester, trimester or quarter. It likely will credit your school account first and then send any extra to you for other expenses.

Controversy and the Future of Pell Grants

The Federal Pell Grant Program started small in 1973, awarding an average of $270 to 176,000 students. It has expanded rapidly since then. Roughly 8.87 million students – more than 40 percent of all college students – received Pell grants in the 2010-11 academic year, with an average award of $4,115 per student.

However, these figures don’t tell the full story. Pell grants now cover the smallest percentage of college costs since the program’s inception. For a student attending a public two-year institution in 2010-11, for example, the maximum Pell grant covered less than two-thirds of costs. This is down from a full 99 percent in the 1979-80 school year.

Democrats and Republicans agree that the decreasing value of Pell grants is a serious problem for low-income students. About 63 percent of Pell grant recipients now require student loans to complete college, compared with just 30 percent of other students.

Democrats and Republicans agree that Pell grants no longer provide enough aid for students, but they disagree on how to address the problem.

In his first few years in the White House, Democratic President Obama doubled Pell grant funding from $16.3 billion in 2008-09 to $32.9 billion in 2010-11. He has stated his intent to continue increasing the program’s funding in his second term.

However, Obama has given in to some Republican ideals, signing a compromise in December 2011 to tighten eligibility requirements for Pell grants. The changes excluded 100,000 students who previously met requirements.

Republicans, including 2012 presidential nominee Mitt Romney, believe Pell grants should be reserved for the “truly needy” in order to keep the program sustainable. Romney and his running mate, Rep. Paul Ryan, chairman of the House Budget Committee, said they wanted to focus on curbing the rise of tuition rather than increasing financial aid.

To that end, Ryan proposed a budget in 2012 that would have limited federal financial aid. He stated that continuing to increase grant and loan practices would further fuel tuition inflation.

While officials have not yet made long-term decisions, they hope to find a solution in the near future.

Other Financial Aid Options

If you don’t qualify for a Pell grant but need financial aid to help you through school, you may qualify for other options. If you’ve already completed the FAFSA, you’ll automatically find out if you qualify for other federal aid like student loans, as well as some school-specific aid.

Other popular forms of financial aid include scholarships and private student loans. Scholarships are awards that are typically based on merit such as a student’s academic or athletic performance.

Private student loans, on the other hand, depend on your credit history and score. As a young adult, you may not have a long credit history, so it’s usually in your best interest to use a co-signer.

As college costs continue to balloon, it’s important for you to consider all of your options to help you pay for higher education. While federal solutions may be forthcoming, you have other ways to help pay for college in the meantime.

Cecillia Barr

Cecillia Barr is a graduate of the University of Central Florida. She blogs about her extensive knowledge on student loans in order to help others reduce their debt and live financially independent lives.

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