Unlike student loans, the money you receive from Pell Grants does not need to be repaid. Pell grants are offered to students who have not yet earned a bachelor's degree, as well as some individuals who are enrolled in a post-baccalaureate teacher certification program.
Eligibility for a Pell grant is based upon the results of your Free Application for Federal Student Aid, commonly known as FAFSA. When you file a FAFSA, your income, family size, number of college students in your family -- and if you are a dependent student, your parent's income and assets -- will be calculated to determine a figure known as the Expected Family Contribution, or EFC. If your EFC is under the cutoff point, you maybe eligible to receive a Pell grant; for the 2010-2011 school year, the maximum EFC is $5,273.
In addition to family contribution guidelines, there are several other factors that will be taken into account when determining your eligibility for a Pell grant. These include the number of credits you are taking per semester, and the type of program you are enrolled in, such as an associate or bachelor's degree. Your overall financial need -- based on your expected family contribution and the cost of attendance at your school -- will also be considered.