Can You Get a Pell Grant and a Student Loan at the Same Time?

It is generally possible to receive both a Pell Grant and a student loan simultaneously to help finance educational expenses. These two forms of financial assistance serve different purposes: Pell Grants are gift aid that does not require repayment, while student loans are funds that must be repaid with interest. Despite their differences, they frequently work together as components of a student’s comprehensive financial aid package, helping students cover a broader range of costs associated with higher education.

Understanding Pell Grants and Student Loans

Pell Grants represent a form of federal financial aid specifically designed for undergraduate students who demonstrate exceptional financial need. This grant money does not need to be repaid. Eligibility for a Pell Grant requires meeting specific criteria, including demonstrating financial need, being enrolled in an eligible educational program at an accredited institution, and maintaining satisfactory academic progress (SAP) toward a degree or certificate. Recipients must also be U.S. citizens or eligible non-citizens.

Federal student loans, in contrast, are funds borrowed from the U.S. government that must be repaid, typically with interest, after a student leaves school. The primary types of federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. Direct Subsidized Loans are offered to undergraduates with demonstrated financial need, and the government generally pays the interest while the student is in school at least half-time, during the grace period, and during deferment periods.

Direct Unsubsidized Loans are available to both undergraduate and graduate students, regardless of financial need, but interest accrues from the time the loan is disbursed. Direct PLUS Loans are available to graduate or professional students and parents of dependent undergraduate students; these loans generally require a credit check and can cover up to the cost of attendance minus other aid. Eligibility for federal student loans also requires enrollment in an eligible program, maintaining satisfactory academic progress, and being a U.S. citizen or eligible non-citizen.

How Financial Aid Packaging Works

Educational institutions play a central role in determining a student’s financial aid eligibility and compiling a “financial aid package.” This package outlines the combination of grants, scholarships, work-study, and loans a student is offered to cover their educational costs. The process begins with calculating a student’s financial need, which is derived from the Cost of Attendance (COA) at a school minus the Student Aid Index (SAI). The COA includes tuition and fees, room and board, books and supplies, transportation, and personal expenses.

The SAI is a number calculated based on the financial information provided on the Free Application for Federal Student Aid (FAFSA). This index represents an eligibility index, not an amount of money a family is expected to pay, but rather a number used by schools to determine federal student aid eligibility. The school’s financial aid office uses the COA and SAI to determine a student’s demonstrated financial need.

Financial aid is awarded in a specific hierarchy to maximize the benefit to the student. Gift aid, such as the Pell Grant, is awarded first to reduce the student’s out-of-pocket expenses. After grants and scholarships are applied, federal student loans may then be offered to cover any remaining financial need, up to the calculated Cost of Attendance. The amount of Pell Grant a student receives is directly tied to their SAI and enrollment status, while federal student loans are offered to help bridge any remaining gap between the cost of attendance and other aid received.

Applying for Federal Student Aid

Applying for both Pell Grants and federal student loans begins with completing the Free Application for Federal Student Aid (FAFSA). This single application is the gateway to almost all federal student aid. Students must gather necessary documents, such as tax returns, W-2 forms, and records of untaxed income, before starting.

The FAFSA can be completed online and must be submitted by specific federal, state, and institutional deadlines. After submission, the student receives a Student Aid Report (SAR), which summarizes the FAFSA information and indicates the calculated Student Aid Index (SAI). Schools listed on the FAFSA also receive this data.

Once a school receives FAFSA data, its financial aid office will prepare a financial aid offer, outlining the types and amounts of aid the student is eligible to receive. This offer may include Pell Grants, federal student loans, and other forms of aid. Students must review their financial aid offers carefully and formally accept or decline the aid, including specific loan amounts, through the school’s designated process.

Managing Your Financial Aid

Once financial aid is awarded and accepted, the funds are disbursed directly to the student’s account at the educational institution. This occurs at the beginning of each academic term. The funds are first applied to tuition, fees, and other charges owed to the school. If the total aid disbursed exceeds the charges, the remaining balance is issued to the student as a refund, which can be used for living expenses, books, and other educational costs.

Federal student loans enter repayment after a student graduates, leaves school, or drops below half-time enrollment. Most federal student loans include a grace period, a set period of time after leaving school during which payments are not required. For Direct Subsidized and Unsubsidized Loans, this grace period is six months.

Students have ongoing responsibilities to maintain their eligibility for financial aid. This includes making satisfactory academic progress (SAP) toward their degree or certificate, meeting specific GPA and completion rate requirements set by their school. Understanding the terms and conditions of any accepted federal student loans, and communicating promptly with the financial aid office regarding enrollment changes or financial circumstances, are important aspects of managing aid.