In 1972, the federal government noted a startling trend: the number of middle- and upper-income students receiving college degrees was more than double the number of low-income students receiving degrees. Post-secondary education was financially out of reach for a large segment of the population. As a potential solution, Congress implemented the Basic Educational Opportunity Grant, later known as the Pell Grant. Designed specifically for low-income families, the Pell Grant has helped needy students make their college dream a reality.
Many families believe all students are entitled to Pell Grants from the government. In truth, only students with financial need, as determined by the U.S. Department of Education, are eligible for Pell Grants. Even among students with need, Pell Grant amounts vary based on calculations determined by Congress. Some students also believe that Pell Grant awards must be repaid, similar to other government programs such as Stafford and PLUS loans. But Pell Grants are scholarship awards, free money that is never paid back.
Pell Grant awards are based on four factors. First, and most important, is the student's expected family contribution (EFC) as determined by information entered on the Free Application for Federal Student Aid (FAFSA). The FAFSA records student income and assets, parent income and assets (for dependent students), family household size and the number of family members attending postsecondary schools. This information determines the EFC. In addition to the EFC, Pell Grant awards are based on cost of attendance at the chosen institution, the student's enrollment status (full-time versus part-time) and how much of the academic year the student plans to attend.
Because Pell Grants are designed to assist low-income students obtain a degree, they are available only for students pursuing their first undergraduate degree, either a bachelor's or an associate's degree. Exceptions are made for post-baccalaureate work, primarily for students in teacher certification programs. The maximum award varies from year to year and is distributed through the school. According to thePell.com, "The maximum amount of Pell Grant money you can receive for the entire 2008-2009 school year is (was) $4,731." Recipients of Pell Grant money are also eligible for other federal programs, including subsidized and unsubsidized loans.
Because of funding cuts, Pell Grant awards have not kept pace with rising education costs. The College Scholarships website points out, "The Federal Pell Grant program has born the brunt of various federal funding cuts over the years." As a result, fewer students are being helped by the Pell Grant program and more low-income students are being forced to seek government and private loans to fund post-secondary education.