When discussing how to pay for college, many parents and students alike get excited by the idea of scholarships. It means you are a high-achieving student, and it’s money you won’t need to pay back. While scholarships are certainly worthy of celebration, did you know that there are many federal grants for which you may be eligible, that also won’t have to be repaid?
One of these grants is the federal Pell Grant, which is given out by the U.S. government. Because of its reputation as being a grant for low-income families, thousands of students each year who may qualify do not apply. This leads to a reported $2.9 billion in Pell Grant Funds in 2014 going unused due to low applicant numbers.
With all of that money on the table, it’s worth it for students to get to know more about a Pell Grant. How can it help pay for school, and potentially lower the amount you have to borrow?
How Pell Grants work
Like other forms of federal, state, and school aid, students can apply for Pell Grants by filling out the Free Application for Federal Student Aid (FAFSA). Administered by the U.S. Department of Education, you’ll absolutely receive the full amount if you qualify each year, and Pell Grants are either paid to your school or paid out to you directly.
Pell Grants are given to students pursuing an undergraduate degree based on the Adjusted Gross Income (AGI) and Expected Family Contribution (EFC) reported by their family on their FAFSA.
Yes, most Pell Grant recipients are students with a household AGI of $50,000 or less, but depending on how many children in the family are in college at the same time, students in families with higher AGI can qualify for more grant dollars than they were previously aware of.
Unlike student loans, Pell Grants do not have to be repaid. So, yes, it’s basically free money — and you might be missing out by not applying!
How much can I qualify for?
The maximum amount students can receive in Pell Grants changes annually, but for the 2016-2017 school year the max is $5,815. This is an increase from the amount in 2014 and 2015. Students may or may not receive the maximum award depending upon a few factors, namely:
- Total financial need
- Cost of attendance at desired institution
- A student’s status (either full- or part-time)
- How long you’ve been in school (you can only receive Pell Grants for a total of 12 school semesters, or roughly six years.)
It is also worth noting that if your parent or guardian died in combat in Iraq or Afghanistan, or during the events of 9/11, you may be eligible to receive additional Pell Grant Funds, regardless of your family’s income.
What determines Pell Grant eligibility?
Technically everyone is eligible, although it is only given to students with legitimate financial need. There are, however, a few Pell Grant qualifications you must meet. These grants are only given to students who:
- Have completed a Pell Grant application
- Have not previously received a Bachelor’s degree
- Have received a high school diploma or GED
- Are registered to attend a higher education institution that will accept a federal Pell Grant as payment
Non-U.S. citizens and convicted felons are ineligible to receive funds.
Each year federal Pell Grant funds are left unused because students who feel they may not meet the Pell Grant requirements do not take the time to fill out the FAFSA, or they do not complete the FAFSA on time.
With the cost of college still on the rise, and with more middle-class Americans applying for aid than ever, it makes sense to fully research your options either way. Completing a Pell Grant application is free and easy, so there’s no reason not to submit one. You never know how much you may qualify for until you apply!
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust 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.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.97% – 12.97%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|4.00% – 13.00%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents||Visit Citizens|