Pell Grant and Taxes – How It Works

Managing your finances on your own is not an easy task, but it does not have to be confusing either. The awarding of a Pell Grant is usually a very smooth process. This is equally true for its disbursing. You simply need to fill in the FAFSA and submit the necessary documents to your school’s financial aid office. Then you can readily take advantage of the funding. The things can get a bit more complex when it comes to completing a tax report. It is a good idea to learn more about this, so that you avoid any potential problems in the future.

The IRS treats the Pell Grant as a scholarship for determining tax treatment. Since this type of grant is considered to cover your cost of attendance and other relevant educational expenses only, it is tax free. This means that you do not have to file a tax return, if the Pell Grant is the only income that you receive. Similarly, you should not include it in the tax return form that you or your parents file for income earned from other sources.

Many students are confused by the fact that the Pell Grant is not taxable only if the money is spent on educational expenses. The latter term is very vague, but the IRS has given a definition for it. These expenses include tuition fees and other costs related to attendance, such as money spent on textbooks and other equipment. Still, grant money spent on room and boarding, travel and equipment not used for educational purposes is taxable.

These differences usually do not concern students receiving a Pell Grant since most, if not all of it, goes directly for covering tuition fees and other charges related to the cost of attendance. The school applies the money directly towards your account so that your debt to them is cleared. If there is a remainder left and you spend it on anything related to school, you do not have to report this income. Generally, this sum is usually very small, so you will not have a problem if you do not include it in your tax report, even if you spend it on childcare, for instance.

However, the situation is different if you receive the Pell Grant or part of it directly from your school in the form of a check. In this case, the income is still considered tax free provided that you can prove that you have spent it for education costs that qualify. For instance, if you use the money to pay your tuition fees, you do not have to include it in your tax return. However, if you spend it on your room and boarding, the income automatically becomes taxable. That is why you should be careful what you use the grant for.

Overall, you should follow the rules regarding the use of the Pell Grant and you will not have problems when it comes to filing your tax report. If your personal situation is more specific, you should ask a specialist for individual advice.

What Colleges You Can Use a Pell Grant for?

The higher education gives you a lot of opportunities. You will be able to find a better paid job and pursue a more fulfilling career after you graduate. Higher education is expensive, but there are a lot of ways in which you can get financial aid. You can get a Pell Grant provided that you are a student from a low-income family who is on an undergraduate course. There are some requirements that your college has to meet as well.

In general, all types of colleges can participate in the Federal Pell Grant Program. You can get this scholarship if you are a student in a 4-year liberal arts college, community college, junior college and career college or a university. The only other condition regarding the educational institution is that it has to participate in the Pell Grant program. The information about their participation is on the website of every college.

The duration of the course you are enrolled in is not relevant. You can be on any summer, 2-year or 4-year program or any other course that leads to a degree or to the receipt of a diploma or certificate. Both full-time and part-time students are eligible for the funding. However, if you pursue a second bachelor’s degree, you are not eligible for a Pell Grant.

Basically, you can get this grant from any college, provided that it participates in the program for it. It is not uncommon for students to choose a school based on the funding they have available. If this is the case with you, you should take into account a number of factors.

The maximum Pell Grant that a college student can be awarded is $5,550. You will get two equal portions of this sum for each of the two semesters during the school year. Still, if your expected family contribution (EFC) is zero, this sum will be lower. Additionally, part-time students usually receive smaller sums that full-time ones.

It is common practice for colleges to apply the money you receive to your tuition fees (cost of attendance) directly. Thus, you should check the size of these expenses for the different schools you are considering. The maximum Pell Grant is insufficient to cover the tuition fees of most liberal arts colleges and universities, so you have to look for additional funding.

However, the grant can fully cover the cost of attendance of a community college. In this case, you might even have money left to yourself. Your school is obliged to disburse the remained directly to you. In turn, you can use it to cover any expenses related to your education. You can buy a new computer, get a card for the public transport, pay for your lunches at school or even cover childcare expenses. Generally, if you want your Pell Grant to cover your tuition and to get an overage, you have to look for a school with a lower cost of attendance.

Irrespective of the college you choose, you should apply for a Pell Grant as early as possible to get the funding on time.

How Long You Can Use a Pell Grant for?

Any student coming from a family with an income lower than $50,000 per year can take advantage of the Federal Pell Grant Program. All students can apply using the standard Free Application for Federal Student Aid (FAFSA) form. The process is really simplified since you can fill in and submit your application online. However, the entire system is complex. As a result, it is perfectly normal for students to have questions regarding the duration of the Pell Grant.

You apply for a Pell Grant per academic year. As a result, you will get a sum of money for an entire academic year. The confusion comes from the fact that the grant is not disbursed in one tranche. The amount available to each student is split so that there is an equal sum for each term. In most cases, the students attend a fall and spring semester. In turn, they get half of the money in the fall and the other half in the spring. You do not have to reapply to receive the part of the Pell Grant for the second semester.

Still, if you start school in the spring semester or if you return after a leave, you can still apply for the grant and get it for this term. It is also possible for you to receive the grant automatically the following semester, if they fall in the same academic year for you. If your case is specific, you can ask your school’s financial aid office for individual advice.

It is now possible for a student to get Pell Grant funding for their summer courses as well. If you plan to take classes in the summer as part of your degree, certificate or diploma program, you can include this information in your financial aid application for the respective academic year. You simply have to check carefully which academic year the summer courses fall in.

Generally, the application cycle for a Pell Grant for an academic year starts on January 1st and ends on July 30th of the following calendar year. For instance, you can apply for a 2011/2012 grant from January 1st 2012 to June 30th 2012. This means that you have to reapply for a Pell Grant every academic year, preferably before its start. The earlier you apply the better. In this way, you will be able to get the sum you are eligible for before the start or soon after the start of the first semester.

Students can receive a Pell Grant for up to 18 semesters. If your school does not use this standard system, then an equivalent is applied. This rule gives you the option to apply for, get and use the grant throughout all 4-years that you need to complete a bachelor’s degree. The situation with students pursuing an associates degree is slightly different. You can use a Pell Grant for the 2 years of study for completing the degree. If you decide to pursue a 4-year bachelor’s degree, you will be eligible for the scholarship for 2 of these 4 years.

Pell Grant and Tuition Reimbursement from Employer

You should not hesitate to pursue postsecondary education even if you are already working. This will give you the chance to exploit a lot of benefits, such as a higher salary, promotion and faster career development. It is usually not easier for employed individuals to pay for the entire cost of their education. That is why you should definitely look at all the options for financial aid that you can take advantage of. The Pell Grant will certainly help you a lot and so will any tuition reimbursement available from your employer.

There are a number of things that you should take into account when considering to use the two type of aid together. Firstly, you have to be eligible for a Pell Grant in order to get it. Since you are employed, your income and other relevant financial factors, including your cost of attending school, will be taken into consideration so that your expected personal contribution can be determined. It should be equal to or less than $5,273. Hence, if you are classified as a student who is able to contribute more, you will not be awarded the grant.

Another thing you have to consider is the amount of tuition fee reimbursement your employer can provide. Some companies may offer 25% reimbursement only while others can agree to cover 75% or 100% of your costs. Keep in mind that you have to take the money out of your pocket first. This means that you have to secure enough funds to pay your cost of attendance in order to get the reimbursement.

You have to be extremely careful when combining the two options. You cannot get reimbursed by your employer for the part of your tuition fees that are covered by the Pell Grant. That is why you should arrange for everything in advance and get a clear idea of your cost of attendance and how much of it will be covered by the two sources separately. It is perfectly possible for you employer to refuse to make any reimbursements before the Pell Grant has been applied to your tuition fees.

The best course of action will be to apply early for Federal financial aid in order to get the scholarship first. Then, you can cover the remainder of the tuition fee, if any, out of your pocket and request the reimbursement from your employer. Of course, you should have made the appropriate arrangements with the company first.

You have yet another option that you have to consider. You may arrange with your school for a partial application of the Pell Grant towards your cost of attendance. In this way, you will get to use a larger chunk of the money from the scholarship for other school expenses, such as books and a computer, for instance. You will also get a bigger reimbursement from your employer since you will pay a bigger portion of the tuition fees out of your pocket.

Overall, you have to arrange your Pell Grant and tuition reimbursement as best as possible and keep your finances under control.

Can You Receive a Pell Grant and Participate in a Work-Study Program at the Same Time?

You should explore all your options if you are in need to financial aid for financing your postsecondary education. There are plenty of opportunities that you can take advantage of, so you should not miss your chance. Both the Pell Grant and the Work-Study program, available from the Federal Government, are designed to aid you in paying your costs for school. You should definitely learn how they can be useful to you.

You can receive a Pell Grant and participate in a Work-Study program at the same time. The two are not mutually exclusive. You can readily take advantage of both sources of funding. Still, you have to consider a number of other factors regarding these two financial aid options.

In order for you to get a Pell Grant and participate in Work-Study, your school has to offer both type of programs. Most schools do, but some do not have the capability to participate in the latter because it is more complex to administer. Hence, you should check whether you can get both types of aid from your school.

You can apply for both programs automatically using the standard Free Application for Federal Student Aid (FAFSA). You simply need to indicate that you have an interest in the Pell Grant and in Work-Study. You will receive your expected family contribution (EFC) sum which will determine your eligibility for Federal financial student aid. If you are eligible for both programs, then you have to check with your school what the specific arrangements are.

There is one essential point that you should keep in mind. Your income from your Work-Study job is not included in your expected family contribution. Simply put, this income will not determine how much Federal financial aid you will get. This means that you will not get a smaller Pell Grant because you participate in the Work-Study program. You are asked to announce these earnings separately on your FAFSA form, so that they are not considered when your eligibility for Federal grants is determined. Still, this income is taxable and you have to include it in your tax return.

Generally, it is perfectly possible for a student to receive a full Pell Grant and to participate in Work-Study at the same time. You have to decide whether this combination works well for you. Some students find it difficult to work and study at the same time. As an undergraduate student, you are permitted to work for up to 40 hours a week, but this is way too much. Most students are recommended to be on the job for no more than 10 to 20 hours a week. In addition, you have to take into account the fact that you will not have a wide range of choices when getting a job as part of this program. In addition, you might have to meet some requirements in order to get a position.

Overall, you can take advantage of a Pell Grant and Work-Study, but you have to make sure that you can manage between work and school.

Can You Qualify for Both a Pell Grant and a Cal Grant?

There are a lot of financing options for students from low-income families pursuing postsecondary education. You should not hesitate to exploit all funding options available. This is applicable to both the Pell Grant and the Cal Grant.

You can qualify for both a Pell Grant and a Cal Grant. The two scholarships are not self-exclusive. In fact, they are two different types of grants. The Pell Grant is provided by the Federal Government and this makes is a federal grant. The Call Grant is available from the state government of California. The eligibility criteria for the two differ to an extent, but you should not miss to apply for both, if you need financial aid for paying for your studies.

Generally, all federal and state scholarships are separate. This means that you can participate in any number of programs as long as they are not self-exclusive. For instance, it is possible for you to get a Pell Grant, a Cal Grant and get a job from the Federal Work-Study program.

You can apply for a Pell Grant and a Cal Grant at the same time. Keep in mind, however, that the eligibility criteria are different. This means that you might be able to get only one of them and not the other. Still, you should apply for both, if you think you are eligible. The application process is simplified, so you do not have to submit separate forms.

You have to fill in the Free Application for Federal Student Aid (FAFSA) and submit it. In addition, you need to file your verified GPA with the California Student Aid Commission in order to complete your Cal Grant application. You do not need to do fill in additional applications forms or submit any other documents in order to get a Pell Grant.

You have to be aware of the deadlines for the grants as well. This is important if you want to arrange your financing as best as possible. You can apply for a Pell Grant for an academic year at any time prior to and during the academic year until its formal end which is considered to be June 30th. Basically, there is no early deadline. You can apply for and receive the funding upon approval at any time during the school year. Still, it is a good idea to apply at least 8 weeks before the start of your first semester so that you can avoid missing tuition fee payment deadlines.

The situation is different with the Cal Grant. You need to submit your FAFSA form for the following academic year before March 2nd. The deadline for some community college students can be extended to September 2nd, but this is not applicable to all. Hence, if you want to get both types of grants, you should do it to meet the shorter that is the Cal Grant deadline.

Overall, if you start thinking about college financing and take action early, you will be able to receive both a Pell Grant and a Cal Grant.

Can You Get Free Childcare if You Receive a Pell Grant?

Parents with young dependant children usually need more help to get through college. It is worth exploring all your options to figure out how you can get financial and childcare aid. The Pell Grant is awarded to all low-income students who meet the criteria for eligibility. It is not awarded on the basis of the age and family status of the student, so parents who study towards an undergraduate degree can receive it.

Parents who have been awarded a Pell Grant are not automatically entitled to free childcare. There is no package that gives you automatic eligibility for a childcare grant, if you have received this particular scholarship. In addition, the size of your Pell Grant is not based on the fact that you have a child. It is true, however, that this information is usually reflected in your income, so this factor can actually help you get a larger sum.

You should not despair for not getting free childcare with your Pell Grant. The good news is that you have a number of options that you can take advantage of. Firstly, you have to take into account what the Pell Grant sum you receive per semester is. Then, you need to check how your school disburses it.

In most cases, the tuition fees are covered and the remainder of the funds, if any, it paid directly to you with a check. It is also possible for you to receive part or the entire amount of money directly, but in this case your cost of attendance will not be fully covered. In any case, if you get some money in your pocket, you can use it to pay for childcare. The Pell Grant can be spent for anything that aids your education, including childcare costs. You do not have to account for the way in which you spend the sums directly available to you.

The next option you have is to look for childcare grants. The eligibility for a Pell Grant does not automatically make you eligible for such forms of financial aid. You can take advantage of standard Federal childcare grants. There are also grants designed to aid parents who study financially. These are usually available from local governments or from educational institutions. Thus, you should look for available financing at a number of places. Just make sure you meet the eligibility criteria for the grant. These are usually quite specific. Your marital status, income and your child’s age and health status are usually taken in to account to determine eligibility.

There might be childcare aid available directly from your school. Some educational institutions have day care centers for kids. Usually, the staff and the attending students can pay smaller fees for using these services. This is not a direct financing option, but it is certainly a beneficial one.

Overall, you cannot get free childcare with your Pell Grant, but you have a wide range of other opportunities to take advantage of. Make a thorough search and ask for advice at your school’s financial aid office.

Pell Grant Information Center