When it comes to paying for college, there are worse ways to go than grants. In fact, they are one of the best tools to help meet the financial needs of your education. There are grants out there for just about everything, but the most popular by far is the Pell Grant.

The Pell Grant comes from the federal government and is designed specifically to help students pay for their schooling. That’s the basics. Here are a few of the other things you should know about Pell Grants and how they can help you.

No Repayment

You may hear Pell Grants (or grants in general) referred to as free money. While this is kind of a ‘buzzwordy’ description, it does come from some truth. Unlike loans, you do not have to pay grants back. While you don’t have to worry about repayment, you are responsible to use the money on specific things dictated by the grant itself. So, in a sense, it is ‘free’ money. However, in another sense, it is money with strings.


Speaking of strings… If you use the money for something outside of its intended purpose, that money is considered income. In the case of Pell Grants, that specific purpose is educational needs. The problem with a grant being considered income is two-fold:

One – You will have to pay income taxes on the money. Seeing as it wasn’t actually income and you’ve already spent the grant money on something else, you’ll have to come out of pocket for it. Plus, you’ll be giving the money right back to the federal (and possibly state) government  defeating the entire purpose of the grant in the first place.

Two – If you’re still trying to pay for college, that income will be factored into your FAFSA. That means your recorded income will be artificially inflated, which will cause your Expected Family Contribution to increase and your Financial Aid to decrease. Nice going… It’s a good idea to use the grant money the way it’s intended.

Check Your School

Not every school accepts Pell Grants. This isn’t the biggest problem, though. State schools, most private schools, most schools in general do. However, some smaller colleges and specific trade-schools don’t. You should make it a point to check the schools you’re interested in, just to make absolutely sure.


Pell Grants are awarded based on need. In fact, aside from being enrolled in a school that accepts Pell Grants, it’s the biggest deciding factor. This shouldn’t deter you from applying, though. The more you need, the more you get (to a point). That means that some people can get part of the maximum award. Every little bit helps. Also, you only have 12 semesters of eligibility, so don’t dawdle.


The maximum Pell Grant award changes every year. For the 2021-2022 school year, it is going to be $6,495. While that is a nice chunk, a full year college it is not. The Pell Grant is not a full-ride to a university (though it could be more than enough for a community college). It is best when used in conjunction with other forms of financial aid. Be sure to reapply every year you’re in school by filling out the FAFSA form. For more info from the horse’s mouth, visit the government page here.

Many schools will apply your award directly to your bill. Some schools will pay it out to you, and some schools will do a bit of both. In many ways, it’s best to think of the Pell Grant as a discount or coupon of sorts for your education, as opposed to the ‘free money’ it is sometimes described as being.