A complicated calculation known as Expected Family Contribution (EFC), which is the amount that a family can reasonably pay towards their child's college education, determines extreme financial need. A number of factors are taken into account including the state in which you reside, income tax paid, number of family members in college, amount of money in checking and savings accounts, and investments. Income is not the sole determining factor in qualifying for extreme financial need, but families with incomes over $50,000 do not usually qualify for Pell Grants. Families earning under $20,000 a year usually are considered to have extreme financial need for a Pell Grant.
Families earning more than the median U.S. salary may still qualify for extreme financial need. Having parents who are close to retirement age leads to a lower EFC. Having more people in a household also leads to a lower Expected Family Contribution for the household. Students with a sibling who is currently in college have their ETF drop in half, leading to a larger Pell Grant.
Students or their families can apply for a Pell Grant by filling out the Free Application for Federal Student Aid (FAFSA). This can be done online, or a paper application can be requested by calling the Federal Student Aid Information Center (FSAIC) at 800-4-FED-AID. Colleges usually have their own preferred deadline for filing FAFSA forms, but online applications had a 2010 deadline of June 30, 2010 for the fall semester.
Most Pell funding goes to students in extreme need of funds to attend college. The maximum limit for the 2010 to 2011 school year came to $5,550. Students who are not in dire financial need will qualify for lesser amounts, with no grant given for high earner families.
Students with extreme financial need can qualify for up to 18 semesters of tuition assistance via Pell Grants. Two Pell Grants can be received in the same year for accelerated course schedules. Pell Grants are based upon yearly income, so students who no longer experience extreme financial need will qualify for lesser amounts.