Federal Pell Grants are financial awards given to students with significant financial need. The awards are grants not loans, which means the money awarded to the student does not have to be paid back. The amount a student can be awarded depends on financial need. Typically, the greater the need, the greater the award. Federal Pell Grants are only available to undergraduate students seeking a bachelor's degree. In some rare cases, students enrolled in a post-baccalaureate teacher certification program may be eligible.
Getting approved for a Pell Grant can take the worry out of paying college expenses. Depending on financial need, students may get approved for a full grant. Currently, the maximum amount for a Federal Pell Grant is $6,095 for the 2018-2019 academic year. There are several ways to use Pell Grant money; the student may even receive a refund check. Learning to use this money properly can help him avoid having to pay taxes on the grant. The following steps will help you ensure that Pell grant money is used to fund college expenses only.
Retain the tuition bill stating that Pell Grant money can be used to pay the expense. After registering for courses, the student will be sent a bill for tuition and other fees. There will be an option that allows the student to charge the expenses to financial aid or, more specifically, the student’s Pell grant.
Charge bookstore purchases to the Pell Grant. Students can make purchases in the bookstore and have the amount charged directly to financial aid. In some cases, the student can even purchase books at the college’s online bookstore and have the total charged to a Pell Grant.
In the event there are unspent funds, you may need to reallocate the money. Since Pell Grant funds are to be sued specifically for the cost of school attendance, you may or may not be able to have full access to unused funds. You may, instead be able to reallocate the money to pay for things that fall under the general category of school attendance expenses. This may include things like fees, books, or technology for school use. Depending on the amount the student receives, there may be leftover funds. Always check with your local financial aid office for the status of your grant and the amount of available funds.
Put away some of the refund check to cover tuition and books for unpaid semesters. Pell Grants are given out for two semesters. If the student plans to attend three semesters, she must put money back to cover the cost. The student should calculate the cost of tuition, fees and books to determine how much should be put back.
Use remaining funds to pay for additional college expenses. Pell Grant funds are tax-free as long as they are used to pay for college expenses. For example, the funds can be used for supplies, gas, software and other expenses that are directly tied to college. If at any time Federal Pell Grant money is used for personal expenses and not for school, the amount used has to be reported as taxable income. That type of expenditure must be reported on your tax return.
Keep receipts from tuition and bookstore purchases to determine whether your refund check is accurate. Students can choose to purchase books elsewhere and then put the money back into their bank account when their refund check arrives. If the student is unsure whether an expense can be covered with the Pell Grant, he should contact financial aid.
If the student uses Pell Grant funds for personal expenses, the money must be counted as income, and taxes must be paid. The misuse of federal funding is a crime and can result in serious consequences. Any type of misleading or false claim on a financial aid application may result in fines, expulsion from school and possible jail time.