What is a Pell Grant Refund?

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A Pell Grant is a federal student aid award given to students who can demonstrate that they need financial help to attend college. The amount of the award is determined by the information you (and your family) disclose on your FAFSA. A Pell Grant refund is when, after the award has been applied to the student’s school account, there are still funds left over.

The Basics of Pell Grants

The way a Pell Grant works is when the Department of Education, based on a number of factors, decides that a student meets the criteria to receive a financial boost so they can attend the school of their choice. This criteria can be:

The maximum amount of money that can be awarded under a Pell Grant for the 2016-2017 academic year is $5,815. The award is not sent directly to the student; the Department of Education sends the money to the school, for them to make the necessary deductions in the student’s school account. It is entirely possible that if you receive a Pell Grant, you may not see a dollar of that award.

Pell Grant Refunds

However, after the school uses the Pell Grant to pay for your room and board, tuition costs, books and supplies, etc., there may be some money remaining from the award. If this happens, the school will issue the student a “refund,” and this refund is known as the Pell Grant refund.

It’s important to note that a Pell Grant refund is not free money or extra cash that can be spent at will. Even though the money is given to you (as opposed to being given to the school, as in the initial award), the refund is still considered to be a part of the award. Therefore, a Pell Grant refund should still be used to pay for eligible school-related, out-of-pocket expenses, such as public transportation costs, auxiliary materials that were not covered by the initial grant, or even rent for off-campus housing.

If you are the recipient of a Pell Grant refund, you should check with your school’s office of financial aid to check for other eligible expenses for which you can use the money (for example, you can buy gas for your car with your refund, but it is illegal for you to actually buy a car with your refund). Improper or unauthorized use of the Pell Grant refund (or, indeed, of the Pell Grant itself) can result in your school revoking the award.

If you are entitled to receive a Pell Grant refund, your school will disburse the money in installments. For example, a school that operates in two semesters a year will send you a check (or a direct deposit) each semester. If you attend a school on a quarter system, you will get a portion of your refund every quarter.

In summary, a Pell Grant refund is automatically issued to a student when the amount of their Pell Grant award exceeds the total cost of their tuition-related expenses. But it’s very important to be aware of the limitations of Pell Grant refunds.


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