College isn’t getting any less expensive. On the contrary, tuition has been rising for 30 years with no real signs of stopping. For lower income families, this can make the idea of a four-year degree a daunting prospect.

Fortunately, to mitigate these costs there are various forms of financial aid. Unfortunately, all financial aid is not created equal. When most people think of paying for college they imagine mountains of loans and the debt that will be waiting (with interest) upon completion of their degree program.

There’s a better way.


Grants serve essentially the same purpose as loans with the enormous difference being that you don’t have to pay them back.

The government is the source of the overwhelming majority of grants for college. The most famous and widely used being:

The Pell Grant

You can thank the late former Senator from Rhode Island, Claiborne Pell for the ‘Basic Educational Opportunity Grants’ of 1973. These grants that gave students financial aid based on their level of financial need would later bear his name. Ever since then, Pell Grants have helped thousands of Americans pay for college every year.

The application process is simple. You provide your financial information via the Free Application for Federal Student Aid (FAFSA) and the government uses a formula to determine your Expected Family Contribution (EFC) or the number they think you can realistically pay each year. Then your EFC is referenced against the expected costs of the school you plan on attending; this determines how much aid you’ll receive.

Not everyone is eligible to receive the Pell Grant. If your income and by extension EFC is too high, it is determined that you are not in sufficient need.

Moreover, there are other qualifications you’ll need to meet including: You must have a high school diploma, GED, or qualifying homeschool equivalent. You must be a U.S. citizen or qualifying noncitizen. You can’t already have a bachelor’s degree (with some exceptions). Lastly, you must be enrolled or accepted into a qualifying degree or certificate program.

How Much Can You Get?

The maximum amount you can receive from a Pell Grant for the 2021-2022 academic year is up $6,495. Where your award falls on the spectrum will be based on your level of need and whether you plan on being a part-time or full-time student.

Most often, the Pell Grant reward is applied by the school to the major expenses like tuition and room and board. If there happens to be anything left over, it is given to the student directly. How the student uses that money does matter. If they use it for school-related purposes, like textbooks, then it remains tax-free. However, if they use it for anything else, like a TV, then it is considered income and will be reflected as such on their taxes. This is a big deal because it can raise your EFC for next year and lower the amount of aid you receive. Use it wisely.

Realistically, Pell Grants won’t cover all the expenses associated with going to college. They are a huge help to lower and even middle-income families though, and a vastly superior option when compared to loans. There’s even evidence that Pell Grant recipients are more likely to finish their degree programs. So be sure to fill out your FAFSA and see how much you can get.