Federal Pell Grants are given to students from low income families who wish to continue their education past high school. The Federal Government awards financial aid in the form of Pell Grants through the Free Application for Federal Student Aid, or FASFA, for short.
Filling out the FASFA is time-consuming, but not generally difficult. To complete the FASFA, and thus apply for Pell grants, you will need:
1. Tax returns – Income tax returns for the student and the guardian (if under the age of 24) will be used to determine if the family’s income level is too low to afford paying for the student’s college education.
2. Family Information – Your family’s information including birth dates, education status, and place of residences are all very important information. This information will be put on the FASFA so that any irregularity in the data will trigger special awards for first time college students from a particular family, as well as grants and scholarships intended for particular age ranges, demographics, and family makeup.
Everyone is qualified for a Federal Pell Grant until they are told otherwise. After completing a FASFA, you’ll receive a number known as your EFC, or Expected Family Contribution, which is an amount the government believes that you and family members can contribute to your own college expenses. The higher the number, the less money you’ll be eligible to receive from the Federal Government.
This EFC must be lower than $5200 for you to have received Pell Grants during the 2010-2011 school year. In other years, this amount fluctuates, and you should be reminded after filling out the FASFA how this number will relate to your benefits. This year, the smallest Pell Grants were worth a total of $555 per year, while the largest are worth more than $5,000. All Pell Grants are based on your current assets and earning power.
How to get the most of free aid
The FASFA is algorithmic, and thus there are a few ways that you can legally “cheat” the system to get more student aid and government loan help. The best way to boost your aid package is to decrease available student assets.
A student with $2,000 in cash will not receive very much aid because they have so much cash. Instead, the student should plan to spend their money on whatever it is they might need for school before applying for FASFA. The FASFA requires that students spend 30% of their available cash on education costs each year, so having $2,000 in the student’s name will reduce the available grants and loans by at least $600. A student who worked through high school and saved $10,000 would be required to put $3,000 toward his or her first year of school. Meanwhile, a student who worked through high school and saved $0 would be required to put nothing toward their college costs. This isn’t fair, obviously, but it is how the FASFA works and why you should be smart when paying for college costs.
Grants aren’t everything
If you don’t qualify for grants, the next step on the ladder, which you may qualify for, is subsidized loans. Subsidized loans are those which Congress pays the interest on until you graduate. So, if you were to go to school and borrow $5,000, the US government would loan you the money and not charge interest on it until you graduated. After you graduate, the interest on the debt would be lower than other loans, and you would owe, at the time of graduation, an amount equal exactly to the amount of money you borrowed in school. There is nothing better than avoiding compound interest on debt!