When you submit your Free Application for Federal Student Aid (FAFSA), income is not the only information you must provide and is not the only criteria the U.S. Department of Education uses to determine Pell grant eligibility. Other factors such as assets, family size and the number of household members currently enrolled in college are also considerations to Pell grant eligibility and award amounts.
Because factors such as assets and family size are major considerations when determining Pell eligibility, there is no exact cutoff income amount. The Pell grant is need-based and the Department of Education has a specific methodology to determine your financial need. When performing this analysis, the Department of Education will determine your expected family contribution (EFC), based on the income and asset information you provided on your FAFSA. The EFC is the amount of money the U.S. Department of Education can reasonably expect your family to pay toward your college costs. If your EFC is greater than $4,617, you will not be eligible to receive a Pell grant.
Income Protection Allowance
When assessing your Pell grant eligibility, the U.S. Department of Education uses the Federal Need Analysis Methodology to determine your EFC. To account for the amount of your income you use to pay for basic living expenses, the Department excludes some of your income from the Federal Need Analysis Methodology. The Department of Education refers to this as an income protection allowance (IPA). The amount of the IPA depends on your student filing status and household size.
You automatically qualify to receive a Pell grant if your income is equal to or less than 150 percent of the current federal poverty level, you are eligible to receive Pell grant money. The federal poverty level is subject to change each year. 150 percent of the federal poverty level for 2011 is $16,335 for a single person household. This income level increases as your household size increases. For instance, 150 percent of the federal poverty level for a family of four is $33,525.
When you receive a Pell grant and finish out your academic term, you will not have to pay that money back. For instance, if your academic term is a semester and you go to school until the end of the semester, you do not have to pay the Pell money back. However, if you receive a Pell grant and drop out of school when you are less than 60 percent of the way through the semester, you may have to pay back a portion of your Pell award to the U.S. Department of Education.
- U.S. Department of Education: Notice of Revision of the Federal Need Analysis Methodology for the 2010-2011 Award Year; June 2009
- Information for Financial Aid Professionals: The EFC Formula 2011-2012
- FastWeb: Dropping Out means Paying Back Financial Aid; Michael Pugh; August 2008
- FinAid: Income Insufficient to Support Family