Pell grants are government grants awarded to help pay for the tuition and other education-related needs of college students who are financially disadvantaged. According to the U.S. Department of Education, maximum award amounts reach as high as $5,550 for the 2011-2012 school year, although the amount awarded per student varies on financial need.
Not all financially disadvantaged applicants qualify for a government pell grant, however, as they are typically awarded to students who are undergraduates who have not previously completed a four-year bachelor’s degree program. Furthermore, pell grant funding is only available for up to 18 semesters of college for students who first qualified for a pell grant after the summer of 2008
If you wish to apply for a government Pell grant, plan to complete the Free Application for Federal Student Aid as soon as possible after filing your federal and state income taxes for the tax year prior to yours or your student’s college enrollment. Based on the information you provide about your household and its finances, you will be assigned an estimated family contribution amount, or EFC. The amount of your Pell grant award — if any — will depend on your EFC.
If you do not qualify for a Pell grant, or you find that the amount of your award is less that anticipated, there are options for supplementary funding for yours or your child’s college education. For example, during childhood, you can open and contribute to a Coverdell Education Savings Account, or you may want to consider opening a Qualified Tuition Section 529 Plan. Each have tax benefits and drawbacks, so carefully research each to determine which savings plan is right for your family.
If, on the other hand, yours or your child’s college years are fast approaching, you may want to rely on government loans to finance your tuition. Government loans typically require no collateral, no credit check and often come with very low interest rates. Furthermore, loan repayments do not begin until after graduation.