Does the Pell Grant Lifetime Maximum Apply to Me?

Loans, Student Loans
Does the Pell Grant Lifetime Maximum Apply to Me?

President Barack Obama is pushing more programs to make college more accessible for need-based students, including increasing Federal Pell Grants through 2019 and proposing. Since Pell grants don’t have to be repaid, students eligible for the grant get a financial boost without being saddled with high debt upon graduation.

The Pell Grant and other initiatives are meant to increase college graduation rates, but these grants have one major caveat: Every student has a lifetime maximum. If you don’t graduate before it runs out, you’re unfortunately on your own.

Understanding the Pell Grant

The amount you receive from the Pell Grant depends on your financial need, cost of attendance, full-time or part-time status and your plans to attend school for the full academic year or less.

The amounts qualified students are eligible to receive changes annually, which is why there’s no dollar amount assigned to the lifetime maximum. For the current academic year—July 1, 2014 to June 30, 2015—the maximum reward is $5,730; for 2015-2016, the maximum will be $5,840.

You can receive the Pell Grant for no more than 12 semesters, or what would roughly be six years of full-time study. This is where the Pell Grant maximum and the “six year” marker can be misleading.

The award you receive represents 100% of your Pell Grant eligibility for that award year, regardless of the actual dollar amount you are granted. In other words, the lifetime maximum is based on the years enrolled and not in dollars. In total, each year is worth 100%, with a total of 600% lifetime maximum for each student.

“It doesn’t go by total dollars, so if you get a maximum award of $5,730 this year, then you used 100%. If you had a grant last year, which was $5,645, then you also used 100%,” says Hans Hanson, founder of Total College Advisory, based in Fairfield County, Connecticut. These percentages are considered your Lifetime Eligibility Used (LEU).

The percentage regulation was imposed to encourage graduation and reduce federal expenditures. Once that 600% has been reached, there’s no appeal possible and the student can’t receive a Pell Grant at any school.

Determining your lifetime maximum

You can keep track of your LEU by logging onto the National Student Loan Data System using your Federal Student Aid ID. You can find your LEU on the Financial Aid Review page. You’ll also be notified once you’re getting close to reaching your lifetime maximum.

To keep on top of eligibility and lifetime maximum status, students can also check with financial aid specialists at their institutions, says Ingrid Hayes, vice president of enrollment management at Spelman College in Atlanta, Georgia. “You don’t want to miscalculate, because it’s so important for so many students who are trying to find a way to put together the finances for completing their education,” she says.

Since undergraduate students don’t always follow a direct four-year degree path, Pell Grant recipients can hit their maximum limit easier than you may think, says Dr. Pat Watkins, director of financial aid at Eckerd College in St. Petersburg, Florida.

For example, says Watkins, take Joanie, a full-time college student who attends college for three years before pursuing a nursing degree. She has 300% of her LEU remaining, but it will take her four years to graduate. By the time Joanie is in her final year, she will have hit her maximum.

Watkins advises need-based students to exercise caution when registering for classes and selecting majors. “Take what you need for graduation. Meet with your academic advisor to stay on track,” she says. “If you change majors, know how your aid will be impacted.”

Students also may hit the Pell Grant lifetime maximum if they enroll in dual-degree programs, which are common in science and engineering fields. But a four-year graduate who was awarded a Pell Grant each of those years could go back to school for more undergraduate studies and still have two years of grant eligibility left, Hayes points out.

Most importantly, students need to know that these grants are distributed on a first-come, first-served basis. The U.S. Department of Education distributes Pell Grants directly to the schools, which are then given to students who can demonstrate need. Eligibility is determined each year by information students file on their FAFSA applications. “People who are qualified can get left out of the disbursement because they’re not timely in filling out the FAFSA,” says Hanson.

Key takeaways

  • Pell Grants don’t have to be paid back.
  • Students must apply annually for the grant.
  • The lifetime maximum means students need to ensure they complete an undergraduate degree before running out of benefits.
  • If you withdraw from a course after a campus drop date has passed or more than 60% of the term was completed, the grant money will not be recouped and will count toward your overall LEU.
  • If you reach your lifetime maximum and you still have financial need, your eligibility is gone and you’ll have to find other sources of funding, including possibly out of pocket.

 Image via iStock.