According to the US Department of Education "the Federal Pell Grant Program provides need-based grants to low-income undergraduate and certain postbaccalaureate students to promote access to postsecondary education." Formerly known as the Basic Educational Opportunity Grants (BEOGs), Pell Grants are available for use at 5,400 postsecondary institutions and can be used by individuals for any undergraduate degree or vocational certificate. The grant does not have to be repaid.
To be eligible a student must demonstrate financial need. In addition, he must be in an approved undergraduate or vocational program and must not have earned a baccalaureate degree (including postbaccalaureate teacher-certification programs). He must not have been incarcerated in a federal or state penal institution; he must be a U.S. citizen. The Department of Education states that "grant amounts are dependent on: the student's expected family contribution (EFC); the cost of attendance (as determined by the institution); the student's enrollment status (full-time or part-time); and whether the student attends for a full academic year or less."
In order to receive financial aid in the form of a Pell Grant, or in student or institutional loans, a Free Application for Federal Student Aid (FAFSA) must be completed. The U.S. Department of Education states that it "is the form used by virtually all two- and four-year colleges, universities and career schools for the awarding of federal student aid and most state and college aid." It can be filled out online or mailed in by either requesting an application or printing one out. The application asks about citizenship, marital status, the assets and income of both the student and student's parent, and includes several other demographic and financial questions. The answers are used to determine the students expected financial contribution and what types of aid she might be eligible for.
A student's Expected Financial Need, or EFC, is derived from a formula established by Congress and utilizes information the student has supplied on his FAFSA. The formula takes "the student's income (and assets if the student is independent), the parents' income and assets (if the student is dependent), the family's household size, and the number of family members (excluding parents) attending postsecondary institutions. The EFC is the sum of: (1) a percentage of net income (remaining income after subtracting allowances for basic living expenses and taxes) and (2) a percentage of net assets (assets remaining after subtracting an asset protection allowance). Different assessment rates and allowances are used for dependent students, independent students without dependents, and independent students with dependents." After the FAFSA has been filed the student receives a Student Aid Report (SAR) while the school receives an Institutional Student Information Record (ISIR). In the report is the student's EFC. Both the student and institution are notified if the student is eligible for a Federal Pell Grant.
As with most aspects of postsecondary study, deadlines are key. Funding sources are limited and once eligibility is established, are awarded on a first come first serve basis.
See the Pell grant handbook for full details, but here are a few notes about disbursement: According to the FSA Handbook Federal Pell Grant Program, "The maximum Pell Grant award for the 2009-10 award year (July 1, 2009 to June 30, 2010) is $5,350. The maximum amount can change each award year and depends on program funding." Also, "there are several ways a school can pay a Pell Grant to a student. The school can: (1) credit the student's account for any outstanding education expenses, or (2) pay the student directly by check or EFT, or cash dispensed to
the student for which the school gets a signed receipt." Usually, institutions opt to credit the student's account directly. Excess funds, if any, are paid out to the student as living expenses.