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What Is the Pell Grant?

Psst, over here! I have a not-so-secret secret to tell you: Did you know you can get free money for college? I’m not talking about robbing a bank or taking out student loans that rob you of your financial future . . . I’m talking about federal Pell Grants.

A Pell Grant is a type of government assistance that helps students pay for college based on their financial need. Unlike student loans, a Pell Grant is free money that doesn’t get paid back. Isn’t that awesome? Pell Grants are easy to apply for, and they can be used for tuition, books, transportation and other college expenses. We’re going to look at what makes you eligible for this financial aid, how the Pell Grant works, and how much of this funding you can get for school. Let’s get started.

What Is the Pell Grant?

Think of a Pell Grant like a free check from the government to help pay for college. They’re given to students based only on their level of financial need. That means your grades and extracurricular activities aren’t considered when you apply for this kind of financial aid.

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Instead, the federal government looks at your family’s financial situation to figure out how much money you can get for school. If paying for college will be a challenge based on your current household income and savings, Pell Grants can be used to cover some school expenses. And the best part? Pell Grants won’t trap you in a cycle of student loan debt, because the money is a gift, not a loan. So, if you qualify for a Pell Grant, your response should be an automatic yes.

Pell Grant Eligibility

How do you know if you’re eligible or meet the Pell Grant requirements in the first place? Well, to qualify, you have to be a U.S. citizen and planning to enroll as an undergraduate (if you’re not already a college student). Pell Grants don’t have any income restrictions, but they’re only for students with significant financial need. Financial need is based on your expected family contribution (EFC). The maximum amount of money your family can contribute to your college costs and still qualify for a Pell Grant is $6,206 for the 2022­­–23 school year.1

To learn more about what financial aid you qualify for, you’ll need to calculate your EFC by filling out your Free Application for Federal Student Aid (FAFSA). The FAFSA is a form the government and your chosen university use to decide how much money to give you in scholarships, grants and student loans. (Remember, we’re going to stay far away from debt to pay for school.)

It’s important to complete the FAFSA as soon as possible to confirm your Pell Grant eligibility. Funding for Pell Grants doesn’t run out, but you need to know how much money you qualify for so you can budget and plan accordingly before the school year rolls around.

How to Apply for and Accept the Pell Grant

Good news: Applying for the Pell Grant is just like any other government or university financial aid application. After you fill out your FAFSA, you’ll get a financial aid offer letter from your college. This will show you how much financial assistance you’re eligible for—including how much money will come from the Pell Grant.

One of the first sections on your offer letter will show your scholarship and grant awards. Scholarships and grants are amazing—they’re free money! But you need to review this document very carefully to make sure you don’t accidentally accept any student loans.

Your offer letter will have directions for accepting the federal Pell Grant. Review those steps carefully. You may need to sign a document or enter the amount of money you’re accepting in an online form.2 And I’ll say it again: Stay away from those sneaky student loans!

How Much Is the Pell Grant?

Pell Grant amounts change yearly. The maximum federal Pell Grant award for the 2022­–23 award year (July 1, 2022 to June 30, 2023) is $6,895. How much money you can receive depends on four things:3

  1. Your expected family contribution (EFC)
  2. The cost to attend your school
  3. Whether you’re enrolled full time or part time at the university
  4. Whether you’re attending the full academic year or less

Once these things are figured out, you’ll receive an official dollar amount in your financial aid offer letter. It’ll tell you how much money you’ll receive with the Pell Grant on top of other scholarships.

Do I have to Repay the Pell Grant?

The short answer is nope. I’m a big fan of accepting Pell Grants because they give you free money to use for school. That’s right—you don’t have to repay a single penny of your Pell Grant, unlike student loans. That’s an automatic yes, please in my book.

I know paying for college without loans feels countercultural. It would be so easy to just borrow money. But I want you to set yourself up for future success—and you do that by paying cash for school (and that means taking advantage of your Pell Grant).

How Is the Pell Grant Disbursed?

After you fill out the FAFSA, see your eligibility for the Pell Grant, and accept the funds, you can choose how you’d like to receive your grant money. Pell Grants are normally paid out twice per academic year. Your university will give you a document explaining how much the award will be, plus how and when it’ll be paid to you. Here are a few Pell Grant payment options you can choose from:

Your school can apply funds directly to academic expenses.

This will cover costs like tuition, fees and room and board if you live on campus. After these costs are covered, leftover money will go to you for books, transportation and other living expenses.4­­

You can get paid directly with a check.

With free money comes great responsibility. If you receive your Pell Grant as a check, you’re responsible for covering those important school costs. (Best not to spend it all in one place, like the arcade on a Friday night after a long week of exams.) Treat this money like any other income and add it into your college budget.

You can do a split and have school payments and a check.

Splitting your Pell Grant into automatic school payments and a check is a good option if you want to cover big expenses and have some money left over to budget how you want.

Go to College Debt-Free

Pell Grants are an amazing way to help pay for school without getting stuck with student loan payments for years. If you’re looking for more ideas to pay for college without loans, check out Debt-Free Degree. This book will give you a practical step-by-step action plan to cash flow your entire college education and save thousands of dollars in the process. You can do this. I believe in you.

Kristina  Ellis

About the author

Kristina Ellis

Kristina Ellis is a bestselling author who believes no student should be burdened by loans. Drawing from her experience of earning over $500K in college scholarships, Kristina helps thousands of students graduate debt-free through her syndicated columns, podcast appearances, online courses and books. She’s a co-host of The Ramsey Show, the second-largest talk show in America, which reaches 18 million weekly listeners, and she appeared in the award-winning documentary Borrowed Future. Kristina has appeared on NBC News, Business Insider, Fox & Friends, USA Today and Yahoo!, where she’s shared practical, real-world strategies for going to college without debt. Learn More.

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