Pell Grants are available for low-income U.S. citizens, U.S. nationals, and eligible non-citizens. Applicants must have a high school diploma or GED and be enrolled in an undergraduate program to gain funding for post-secondary education. Grants do not need to be repaid, but they do require the grantee to meet certain requirements. The majority of Pell Grants are awarded to students with family incomes that are less than $20,000, though families with incomes up to $45,000 may be considered. Eligibility sometimes depends upon other financial information.
The total amount of funding that an individual can receive from the Pell Grant program depends on a variety of factors. These factors include the expected family contribution (EFC) of the student and his or her family, the total cost of attending the school, full or part-time enrollment status and length of program. According to the Department of Education, there were 5,578,000 new awards anticipated in 2008. Each award fell within the range of $400 to $4,731, but the awards averaged $2,945. Participating Institutions can either credit the student's account or pay the student directly
In order to be eligible for Pell Grant funding, applicants and their families need to demonstrate financial need. All students who are attending one of the approximately 5,400 educational institutions that give Pell funding can fill out the Free Application for Federal Student Aid (FAFSA) with relevant financial information, such as student's income, household size, number of siblings attending college concurrently, and parents' income and assets. The U.S. Department of Education then plugs this data into a set formula to determine the expected family contribution.
Before Pell Grants, most students had to rely on family wealth, loans or scholarships from nonprofit organizations or from the educational institution they were attending to pay for college. In 1972, the Higher Education Act put in place the Basic Educational Opportunity Grant Program. It awarded its first grant in 1976, and it was renamed the Pell Grant program to honor Senator Claiborne Pell (D-RI) in 1980.
In 1976, the maximum Pell Grant of $1,400 covered 72 percent of the costs of a bachelor's degree at a public university. However, because the cost of a college education has grown at a drastically higher rate than the funding for Pell Grants, the maximum Pell Grant in 2006 only covered 33 percent of costs.
The economic stimulus bill of February 2009 increased the number of students who will receive grants by 800,000. It increased the amount of Pell Grant maximum to $5,350 for school year 2009 to 2010 and $5,550 for 2010 to 2011. This increase expires in two years.