The Pell Grant is one of the many government sources of funding for education. Unlike government loans, the Pell Grant does not need to be repaid.
Pell Grants are awarded to undergraduate and certain post baccalaureate students who meet financial need requirements. The grants are administered through participating higher educational institutions who either credit the Federal Pell Grant funds to the student's school account or pay the students directly at least once per term or choose to combine both options.
Pell Grant amounts are determined by the U.S. Department of Education through the Free Application for Federal Student Aid (FAFSA) process. The maximum Pell Grant award for 2009-2010 is $5,350. Award amounts are based on the availability of government funding allocations. Grant amounts are determined by the student's expected family contribution, the student's enrollment status, the specific attendance costs determined by the college or university, and whether the student attends college for a full academic year or less.
The basic formula components used to determine the award amount are:
•Student's income and assets, if the student is independent
•Parents' income and assets, if the student is dependent
•Family household size
•Number of family members (excluding parents) attending post-secondary institutions.
The income qualifications vary and depend on the family's Expected Federal Contribution (EFC). The EFC is the sum of the percentage of net income, which is the remaining income after subtracting allowances for basic living expenses and taxes and the percentage of net assets--the assets remaining after subtracting an asset protection allowance.
Different assessment rates and allowances are used for dependent students, independent students with dependents, and independent students without dependents.
The award amounts vary and in fiscal year 2008, the average Pell Grant award was $2,945.
Students need to complete the FAFSA application process. The FAFSA determines the amount of money a family is expected to contribute to the cost of attending a post-secondary institution. After completing the FAFSA, the student receives a Student Aid Report (SAR) which determines eligibility for a Pell Grant. The school receives the Institutional Student Information Record (ISIR), which contains the student's FAFSA output.