When Do I Have to Pay Back My Pell Grant?
About 7.6 million undergraduate students received a Pell Grant in the 2015-16 school year, according to CollegeBoard, with the average recipient receiving $3,724. The maximum amount awarded that year was $5,775 — not bad for free money from the federal government.
That’s right, Pell Grants don’t need to be paid back, as long as you follow the government’s requirements and don’t do anything to disqualify yourself from receiving it. Here are the three circumstances under which you’d have to repay a Pell Grant:
1. You withdraw from the program for which you were given the grant
If you drop out before 60 percent of the semester is over, the government wants 50 percent of the “unearned’ portion of their money back. This unearned portion depends on when in the semester you drop out. For example:
- Let’s say Zeke gets a $1,000 Pell Grant, but drops out halfway through the semester
- According to the federal government, Zeke did not “earn” half ($500) of his grant
- The federal government will want 50 percent of that $500 paid back (or, $250)
Note: If you drop out after the 60 percent mark of the semester, the government believes you’ve earned your full Pell amount. You do not have to repay any of the Pell Grant money.
2. Your enrollment status changes
If your enrollment status changes after you receive your Pell funds — let’s say you go from full-time to part-time — you have to pay back the difference. If you don’t, you’ll get what’s known as a “Pell overpayment” on your record, which disqualifies you from receiving future federal aid.
3. You receive other aid or grants that reduce your need for federal student aid
This is rare, but it happens. If you submit your FAFSA and get awarded a Pell Grant, only to then be awarded additional non-federal grants and scholarships that reduce your need for the Pell Grant, the government could ask for some back. That’s because by law, your total financial aid cannot exceed the cost of attendance by more than $300.
Let your school’s financial aid office know if you receive additional grants and scholarships, but try not to worry. Before reducing your financial aid package, your school can cover all unmet needs first. Also, your additional grants and scholarship usually affect campus-based aid first, not the Pell Grant.
How to apply for a Pell Grant
To qualify for a Pell Grant, students must demonstrate financial need when they fill out the Free Application for Federal Student Aid (FAFSA). The U.S. Department of Education determines need using a formula established by Congress. The factors that are taken into consideration include:
- The student’s income
- Their family’s income and assets
- Their financial obligations such as housing, utilities and child care costs
- Family size
- Number of kids in college
- The cost of the school you plan on attending
- Whether you plan on attending full- or part-time