Financial need is determined by the U. The fundamental elements in this standard formula are the student's income and assets if the student is independent , the parents' income and assets if the student is dependent , the family's household size, and the number of family members excluding parents attending postsecondary institutions. The EFC is the sum of: 1 a percentage of net income remaining income after subtracting allowances for basic living expenses and taxes and 2 a percentage of net assets assets remaining after subtracting an asset protection allowance.
Different assessment rates and allowances are used for dependent students, independent students without dependents, and independent students with dependents. Federal Pell Grants are direct grants awarded through participating institutions to students with financial need who have not received their first bachelor's degree or who are enrolled in certain postbaccalaureate programs that lead to teacher certification or licensure.
Participating institutions either credit the Federal Pell Grant funds to the student's school account, pay the student directly usually by check or combine these methods. Like scholarships , grants do not have to repaid, and students can qualify for grants from a variety of sources. Grants can be awarded by the federal and state governments, colleges and public or private organizations. Oftentimes, grant money fills the gap between the sticker price of a college and what a family can realistically pay.
Some schools may first opt to apply that grant directly to your COA; some may cut you a check. Some may do a little of each. Your school is obligated to pay you once per term, or twice per academic year.
It varies, so check with your financial aid office. Want to learn more about financial aid? Published in: Grants. Jon is a writer and marketer for Nitro who is passionate about bringing transparency to the student loan process along with providing families with the information needed to make smart financial decisions.
As he continues to pay them off himself, he strives to help others do the same. Jon also has a long history of connecting people with educational opportunities to help them improve their careers and their overall personal finances. In his free time you can find him reading travel blogs and researching destinations around the world in search of his next adventure.
Read more by Jon O'Donnell. View Disclosure. See Examples. Disclaimer: The information obtained throughout the Nitro site is intended to be used for educational purposes only. All product names, logos, and other trademarks displayed within the Nitro site are the property of their respective owners. Here at Nitro we strive to provide you with accurate, up-to-date information, but suggest checking the source directly. We recommend consulting a licensed financial professional before making any financial decisions.
This site may be compensated through our partner relationships. If the student plans to attend three semesters, she must put money back to cover the cost. The student should calculate the cost of tuition, fees and books to determine how much should be put back. Use remaining funds to pay for additional college expenses. Pell Grant funds are tax-free as long as they are used to pay for college expenses. For example, the funds can be used for supplies, gas, software and other expenses that are directly tied to college.
If at any time Federal Pell Grant money is used for personal expenses and not for school, the amount used has to be reported as taxable income. That type of expenditure must be reported on your tax return. Keep receipts from tuition and bookstore purchases to determine whether your refund check is accurate. Students can choose to purchase books elsewhere and then put the money back into their bank account when their refund check arrives.
If the student is unsure whether an expense can be covered with the Pell Grant, he should contact financial aid.
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