Bigger, Better Federal College Grants Coming

Bigger Pell Grants will go to 600,000 more students.


 Amidst the gloomy news of tuition increases and state scholarship cuts, there is one hopeful glimmer: Uncle Sam will give out more and bigger college grants starting July 1. An estimated 8.4 million students—about 617,000 more than last year—are expected to receive federal Pell Grants in the 2010-11 academic year. The average student will get a check worth $3,865 sent to their colleges. That's about $220 more than students averaged last year. Some low income students with top grades could receive nearly $10,000.

 Unfortunately, the improvements to the Pell won't make up for tuition increases at most four-year colleges that are typically $400 to $800 per student this fall. And the Pell increases don't come anywhere near to plugging the scholarship gaps created in states such as Michigan, Ohio, and Missouri, which have slashed programs that gave thousands of dollars apiece to state residents.

 [Read about colleges that don't raise tuition.]

 But some four-year universities are creating new scholarships on their own to make up for the loss in state scholarships, notes Justin Draeger, who will become president of the National Association of Student Financial Aid Administrators on July 1. The University of Michigan, for example, increased its aid budget by more than $8 million for this coming academic year. Michigan says many students could end up paying less out of pocket in the fall of 2010 than they did last year. And several other states, including Georgia, Kentucky and New Mexico, are continuing to fund their scholarship programs. In addition, community colleges, though increasingly crowded, generally remain affordable.

 The scholarship outlook for 2010 and 2011 "is a mixed bag," Draeger says, observing that, increasingly, a student's cost of and access to college depends on the state in which he or she happened to attend high school. "We are facing some serious challenges…and students may be faced now with tougher choices," he says.

 "But financial aid is still available, and there still is a path to college," he says. "We have to tout the victories we have," such as improvements to federal grants.

 The three federal aid victories students can enjoy in 2010 are:

 1. Bigger grants: The maximum federal Pell Grant is set to rise by $200 to $5,550 July 1.

 2. More grants: This year, anyone whose Free Application for Federal Student Aid determines that their family can afford to contribute up to $5,273, and who attends a school where the total cost is greater than $5,549, will receive a Pell Grant of at least $555. (Only students with an Expected Family Contribution of $0 get the maximum Pell.) Last year, the government only handed out Pells to students with EFCs of $4,617 and below. The Department of Education estimates that change alone should give Pell Grants to roughly 8,000 students who did not previously qualify.  For example, a student with a single parent earning an adjusted gross income of about $48,000 could receive a Pell this fall (depending on the parent's age, savings and a few other factors). Last year, that same family would have earned $2,000 to $3,000 too much to qualify. The government's new policy of allowing families to appeal for more aid if they become employed is enabling even more students to get Pells.

 [Read about how to appeal your EFC and ask for more aid.]

On July 1, the government will also launch the Iraq and Afghanistan Service Grants, which award $5,550 to any college student whose parent or guardian died while serving in the armed forces in Iraq or Afghanistan after 9-11. The government expects about 1,000 students will qualify for the grant.

This fall, the government will also continue to award Academic Competitiveness Grants of $750 to freshmen and $1,300 to sophomores who qualify for Pells and get good grades in rigorous courses. It will pay out SMART grants of$4,000 each to upperclassmen who qualify for Pell grants and have earned at least B averages while majoring in science, math, or in-demand languages.