How are Pell Grants distributed?

The Department of Education sends the award directly to the schools. In most cases, the school applies the money to the student's account and returns anything left over to the student, but this varies depending on the school's policies. This is a one-time disbursement for each academic semester. Check with your school's financial aid department to find out when they disperse the award.

Do You Have to Pay Back Pell Grants?

Written by Coursera Staff • Updated on Nov 29, 2023

The Federal Pell Grant program has helped millions of students pay for their college education. Getting money to pay for college is great, but do you have to pay back Pell Grants?

[Featured Image] Future college student applies for a Pell Grant on a laptop computer.

You generally do not have to pay back a Federal Pell Grant, which makes it different from a typical student loan. There are a few circumstances, however, when you may be asked to pay back all or a portion of the grant. This guide will help understand what a Pell Grant is and when you might have to pay it back. We'll also discuss how it can help you pay for your college education and the steps to take to apply for a Pell Grant.

*Keep in mind that you should consult your Pell Grant provider or studentaid.gov to ensure the accuracy of this information as it applies to your unique circumstances and in case the Pell Grant program terms have changed.

What is a Pell Grant?

A Pell Grant is a type of federal student aid given to undergraduate students who demonstrate financial need. Unlike a student loan, Pell Grants usually do not have to be paid back. The Pell Grant gets its name from Senator Claiborne Pell of Rhode Island, the chief sponsor of the 1972 bill that created this education funding program. For the 2021-22 school year, more than six million students received a Pell Grant to help cover the costs of their education [1].

Do you have to pay back a Pell Grant?

Pell Grants are like scholarships, in that you generally do not have to pay back the award money. Nor do you have to work on campus in exchange for the funds. However, the government may ask you to pay back all or a percentage of the amount you received under certain conditions:

You withdraw early from school.

If you drop out of school before the end of the program for which you were awarded the grant, you will have to pay back at least part of your Pell Grant. The government views this as unearned money since you didn't complete the program. Be prepared to pay back half of the "unearned" money. If you received $1,000 and leave school in the middle of the semester, you will pay $250.

Your enrollment status changes.

Changing your course load from full- to part-time status changes the amount of your tuition and reduces your need. If you don't pay back your "Pell Overpayment," you may not be able to receive future federal aid.

Your household income changes.

Your household income is one of the factors used to calculate the amount of your Pell Grant. If your family's income increases, you may qualify for less financial aid and may have to pay back part of your Pell Grant.

You receive financial aid from other sources.

Your overall financial aid package affects the amount of your Pell Grant. If you receive a scholarship or grant after your Pell Grant, the government may ask you to pay back some of the money.

You receive more Federal Student Aid than you're eligible to receive.

If the government pays you more than your eligibility limits, you may need to pay back the overpayment amount. For this reason, it helps to pay attention to the amount of aid you receive in your disbursement.

What happens when you have to repay a Pell Grant?

If your school tells you that you have to repay a Pell Grant, you have 45 days to pay what you owe or agree to a repayment plan. The terms of your repayment plan may allow you to pay the money directly to the school or to a third-party debt collector. It's very important that you follow your agreement in order to maintain eligibility for Federal Student Aid in the future.

Next steps

The financial, academic, and personal rewards of your education have the potential to change the rest of your life. Paying for college can be daunting, but researching the many options available to you is the first step to ensuring you’re as financially prepared as you can be before starting graduate school. Look through financial aid resources on Coursera to get started.

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Frequently asked questions (FAQ)

The amount of money given to each eligible student varies, and this amount can change every year. For the 2022-23 school year, the maximum award was $6,895 [2].

Not every student receives the maximum amount. The actual award amount for each student depends on several factors, such as the following:

Attendance plans Cost of attendance Expected family contribution Enrollment status (full-time or part-time)

Some students may receive additional money from the Pell Grant program. Children of service members who died in Iraq or Afghanistan or who died in the line of duty while working as public safety officers can get a larger award. To qualify for this program, the student must attend school at least part-time and have been younger than 24 when the parent died. ‎

The maximum amount you can receive from a Pell Grant most likely will not cover the entire cost of your education, so most students use Pell Grants as part of an overall financial package. Your award spreads farther depending on the school you attend.

For example, the Pell Grant usually covers a greater percentage of the expenses at a community college than at a four-year private university. Community colleges tend to cost less to attend than universities.

You also can use a Pell Grant to attend a trade school. If you choose this option, you may find that the award pays for more of your program than if you attended a four-year college. In some cases, the award may cover the entire school expense. ‎

Most of the time, the money you receive from a Pell Grant is not taxable as long as you meet two requirements. You must be enrolled in school working toward a degree or job training, and you have to use the money for qualified education expenses. If you use your Pell Grant money to pay for room and board, travel between home and school, or supplies not required by your program, you have to pay taxes on that portion of the grant money. ‎

Article sources

1. Statista. "Number of recipients of the Federal Pell Grant Award in the United States from 1980/81 to 2020/21, https://www.statista.com/statistics/235372/recipients-of-federal-pell-grants-in-the-us." Accessed June 1, 2022.

2. Federal Student Aid. "Federal Pell Grants, https://studentaid.gov/understand-aid/types/grants/pell." Accessed June 1, 2022.

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Updated on Nov 29, 2023

Written by:

Coursera Staff

Editorial Team

Coursera’s editorial team is comprised of highly experienced professional editors, writers, and fact...

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.