The Federal Pell Grant Program Properly Deciphered

Written by Michael Bennet

The Pell Grant program was created in 1972 as an amendment to the Higher Education Act, and was originally called the Basic Educational Opportunity Act until it was renamed in 1980 after the Rhode Island Senator Claiborne Pell.

It was originally created to provide financial aid to those who otherwise wouldn’t be able to afford going to college, and it was first designed to become the government’s bedrock educational assistance program from its inception.

While it has lived up to its initial mission statement to a certain degree, many critics have argued that it hasn’t kept up with the price of inflation, and the rising costs of tuition, and other education-related expenses.

Regardless, it still is able to provide assistance to millions of college students from across the nation, and the prevalence of the award has made it the most popular federal education grant.

Financial Need and EFC

The Pell Grant is mostly given to students who display an exceptional financial need for aid to pay for college, and the way this is determined by the Department of Education is via the EFC metric, or Expected Family Contribution. The EFC is supposed to stand as the amount of money a particular household may be able to contribute towards a student’s higher education, and it is inversely related to a student’s financial need.

  • Financial Need = CoA (Cost of Attendance) – EFC (Expected Family Contribution)

The maximum cutoff threshold in terms of EFC to become eligible for a Pell Grant is now set at 4,995. Therefore students with EFC values that are lower than this number should be able to qualify for the award, while students with higher values will not be able to qualify.

Pell Grant Amounts

Just having an EFC below 5,081 won’t guarantee a particular student the full award amount though, as the amount of aid a student receives via the Pell Grant upon becoming eligible is reliant on a specific formula that takes into account several different factors. These include EFC, cost of attendance, enrollment status, and if the student plans to attend college for a full academic year or not.

The maximum Pell Grant amount is now set at 5,645 dollars, and while most students don’t receive the full award amount, the average amount of aid that was given to eligible students during 2009 was set at roughly 3,600 dollars.

Applying for a Pell Grant

Applying for a Pell Grant consists of filling out, and submitting a FAFSA. The FAFSA, or Free Application for Federal Student Aid, is the official Pell Grant application for all types of federal student aid, including the Pell Grant, and by submitting one by the appropriate deadlines a student can be put in the running for the Pell Grant.

The FAFSA can be completed online, or via its written form. The online FAFSA can be completed at, and the written form can be obtained at most school’s financial aid office, by calling the phone number 1-800-4-FED-AID, or by going online to request a copy.

Pell Grant Changes and Future

The Pell Grant program is always changing, and with the enactment of the Student Aid and Fiscal Responsibility Act, or SAFRA, the Pell Grant has once again undergone a number of significant changes. These include modifications to award amounts, and an increase in the maximum EFC cutoff thresholds.

The maximum Pell Grant amount has now been increased to 5,081 dollars for the 2013-2014 school year, and while this may seem like only a good thing for students across the board, SAFRA has made it so that some students will actually receive a lower proportion of this maximum award amount than they were originally expected to receive.

SAFRA has increased the maximum cutoff EFC threshold to 5,081, and has made the Pell Grant available to more students in doing so. Students that have an EFC that is lower than this value should now be able to qualify for the Pell Grant provided that they can satisfy the assortment of other Pell Grant requirements that may be specific only for the Pell Grant, or for the entire amount of federal student aid that is available.

The federal Pell Grant program will be continually impacted by SAFRA going forward due to the fact that the maximum award amount is scheduled to rise beginning in 2013-14 according to the Consumer Price Index plus one percent on an annual basis. This was implemented as a part of SAFRA to combat the price of inflation, and it remains to be seen whether or not this provision will be able to deliver in this way.