Pell Grants offer money for college
Originally published July 25, 2004 in The (Monroe, La.) News-Star
The difference between "sticker price" and "net price" is bridged by a number of federal, state, institutional and private sources. This second article in this series on the affordability of college will deal with Federal initiatives to help students and their families pay for college.
Under the rubric of the "Great Society," the Higher Education Act of 1965 formed the cornerstone of federal policy in higher education. The Act consolidated several previously enacted anti-poverty measures with programs whose major attention was the provision of access to higher education for the poor and talented students. In 1965, the primary objective was one of equalizing educational opportunity for socioeconomically disadvantaged students by providing equal access to higher education for all students.
The 1972 amendments to HEA broadened the policy objectives to access and choice, and established the foundational role of the federal government in student aid. Direct portable aid to needy students was introduced in the 1972 amendments through the Basic Educational Opportunity Grants. The new BEOG, which was later renamed Pell Grant after Senator Claiborne Pell, was a portable voucher-like system for needy students. These new grants would be awarded solely on the basis of need, and that need was determined by a formula that was administered at the federal level.
Every year, Congress approves the funding for the Federal Pell Grant. When the program first began in 1973, the maximum amount students could qualify for in a BEOG was $452 for an academic year. During the 1973-74 academic year, the federal government spent about $47 million in grant funds. Today, the maximum amount a student could qualify for in a Federal Pell Grant is $4,050 for an academic year. For the 2004-2005 academic year, the federal government is expected to spend $13 billion dollars in grant funds.
Unlike a student loan, the Federal Pell Grant does not have to be repaid. Pell Grants are awarded only to undergraduate students pursuing their first bachelor's degree. However, to receive this entitlement, students must qualify for this program.
To determine if they qualify for the Pell Grant, students must first complete the government's Free Application for Federal Student Aid at www.fafsa.ed.gov. This application becomes available to all students every January 1 for the next academic year, which is considered the fall and spring semesters. The FAFSA specifically requests certain information from the students' and/or their parents' current federal tax returns, as well as other financial resources such as family investments and businesses. The information reported by the students and their parents on the FAFSA is used to calculate the Expected Family Contribution. The EFC appears on the student's Student Aid Report that is an analysis of the FAFSA sent to the student by the U.S. Department of Education. The EFC acts as an index to determine eligibility for the Federal Pell Grant.
The application also requires the students to list their college's Title IV Federal School Code. Once the FAFSA application has been processed, the students' FAFSA information is then electronically transmitted to their college choice that was listed on their FAFSA. The college financial aid office begins the process of awarding the Federal Pell Grant the student is eligible for based on the EFC. If the EFC is below a certain number, the student can qualify for the Pell Grant. An index chart is provided by the federal government to the colleges' financial aid offices determines the dollar amount a student can be paid in the program. The EFC cutoff number for the 2004-2005 academic year in the index chart for Federal Pell Grant eligibility is 3850. The formula for the EFC calculation is established by law. Families can find out how this calculation works by downloading worksheets from the U.S. Department of Education's Web site at www.ifap.ed.gov, or they may contact the Federal Student Aid Information Center at (800) 433-3243. The dollar amount students receive in a Pell Grant is based not only on their EFC, but also whether they will attend full time or part time, and whether or not they attend a full academic year. It is also based on their cost of attendance, which is a yearly amount of how much it will cost to attend college. The cost of attendance includes tuition and fees, room and board, books and supplies, as well as transportation and personal expenses. So, for example, if a student has an EFC of 1601 and he/she plans to enroll as a full-time student, Pell Grant eligibility for that student based on the index chart and cost of attendance would be $2,400 for the academic year or $1,200 per fall and spring semesters.
The colleges are required to notify the students in writing of their Pell Grant award, as well as other eligible financial aid awards for which they qualify. The student signs and returns the award notice, as it's called, to the college's financial aid office. Upon receipt, the college credits the award(s) to the student's fee account no earlier than 10 days before the semester begins. The Federal Pell Grant will pay tuition and fees, and if applicable, room and board expenses. If there is a remaining balance after all fees are paid, the student receives a refund either in the form of a check or direct deposit. This refund can be used for books or other collegiate expenses.
It's always important to remember that applying for federal assistance is a process. Often times, processing financial aid takes at least six to eight weeks. That's why students needing financial assistance should apply early and know their college's deadlines. Students are required to re-apply every year for federal assistance. Applying late will only cause delays and sleepless nights about how to pay for the costs of attending college.
Next week we will explore the Federal Loan programs.
This article was written by James E. Cofer, president; Ralph Perri, director of financial aid; and Roslynn Pogue, associate director of financial aid at the University of Louisiana at Monroe.