What Is the Income Limit for a Pell Grant?

A Federal Pell Grant is a form of financial aid designed to help undergraduate students from low-income backgrounds afford higher education. This grant is need-based and is funded by the federal government, making it a significant resource for many students pursuing their first bachelor’s degree or a qualifying certificate program. Unlike loans, Pell Grants generally do not need to be repaid, provided the student meets ongoing eligibility requirements. The primary purpose of this grant is to reduce the financial burden of college attendance for students who demonstrate substantial financial need.

The Concept of Student Aid Index

There is no single, fixed income limit that determines eligibility for a Pell Grant. Instead, a student’s eligibility is largely determined by their Student Aid Index (SAI), which replaced the Expected Family Contribution (EFC) for aid years beginning July 1, 2024. The SAI is an index number colleges use to assess a student’s financial need and determine their eligibility for federal student aid. A lower SAI indicates a greater financial need, increasing the likelihood of receiving a Pell Grant and potentially a higher award amount.

The SAI is calculated using a federal formula, considering the financial resources of the student and, if dependent, their parents. This calculation determines how much a student and their family can reasonably contribute towards educational expenses. The SAI can range from a negative value, as low as -$1,500, to a high positive number. An SAI of zero or below generally guarantees eligibility for the maximum Pell Grant award.

Key Data Points for Pell Grant Eligibility

The Student Aid Index (SAI) calculation relies on specific financial and family information. A primary component is the Adjusted Gross Income (AGI) from the “prior-prior year” tax return. For the 2024-2025 academic year, this means income data from the 2022 tax year.

Untaxed income also plays a role in the SAI calculation. This includes untaxed portions of IRA or pension distributions, tax-exempt interest income, and foreign earned income exclusions. For aid years beginning July 1, 2024, child support received is now considered an asset rather than untaxed income.

Assets, both student and parental, are another factor. This includes the net worth of investments, such as real estate (excluding the primary residence), vacation homes, and accounts like savings, checking, and money market funds. Certain assets are excluded, such as equity in a primary residence and funds in qualified retirement accounts like 401(k)s and IRAs. However, withdrawals from Roth IRAs for college expenses are counted as untaxed income on the FAFSA.

Family size is also considered, as it impacts allowances against income and assets in the SAI formula. The number of dependents influences the family’s ability to contribute to college costs. For aid years starting July 1, 2024, the number of family members currently enrolled in college is no longer factored into the SAI calculation.

Other Pell Grant Requirements

Beyond financial need, students must meet several non-financial criteria to qualify for a Pell Grant. Students must be enrolled in an eligible undergraduate degree or certificate program at a participating college or university. Pell Grants are awarded to students who have not yet earned a bachelor’s or professional degree.

Maintaining Satisfactory Academic Progress (SAP) is an ongoing requirement. Students must meet specific academic standards set by their institution, including maintaining a minimum Grade Point Average (GPA) and completing a certain percentage of attempted credits. Failure to meet these standards can result in the loss of Pell Grant eligibility.

Applicants must be U.S. citizens or eligible non-citizens. Eligible non-citizen statuses include:

• Lawful permanent residents (Green Card holders)
• Refugees
• Asylees
• Citizens of the Freely Associated States (Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau)

Documentation is required to verify citizenship or eligible non-citizen status. Students must also possess a high school diploma or its recognized equivalent, such as a GED certificate. Additionally, students must not be in default on any federal student loans or owe a refund on a federal grant.

The Pell Grant Application Process

The primary step to apply for a Pell Grant, and most other federal student aid, is to complete and submit the Free Application for Federal Student Aid (FAFSA). The FAFSA is available online through StudentAid.gov, though a paper option is also available. Applicants should complete the FAFSA accurately and provide all requested information.

The FAFSA requires income information from the “prior-prior year.” After submission, applicants receive a FAFSA Submission Summary, which replaced the Student Aid Report (SAR) for the 2024-2025 award year. This summary provides an overview of the submitted information, including the calculated Student Aid Index (SAI), and indicates potential eligibility for federal aid. Students should review this summary for any inaccuracies and make corrections promptly. Federal, state, and institutional deadlines for FAFSA submission vary, so applicants should be aware of all applicable deadlines.

Pell Grant Award and Disbursement

Once a student’s FAFSA is processed and eligibility is determined, the actual Pell Grant amount received depends on several factors. These include the student’s Student Aid Index (SAI), the Cost of Attendance (COA) at their chosen institution, and their enrollment intensity (e.g., full-time, half-time). For the 2024-2025 award year, the maximum Federal Pell Grant award is $7,395, while the minimum award is $740. The specific amount received will be prorated based on enrollment intensity, with full-time enrollment receiving the full calculated award.

Pell Grant funds are disbursed directly to the college or university. The institution applies these funds to the student’s account to cover eligible educational expenses such as tuition, fees, and on-campus room and board. If remaining funds exist after institutional charges are covered, the balance is then disbursed to the student. This remaining balance can be used for other allowable educational and living expenses, including books, supplies, transportation, and off-campus housing. Schools disburse funds at least once per term, or twice per academic year for non-term programs.