How do I get my Pell Grant refund?
Students who receive substantial private and institutional scholarships may be eligible for a Pell Grant refund. Any student who fills out the FAFSA is considered for the Pell Grant automatically. If your educational expenses are funded by other scholarships, you may be left with leftover Pell Grant funds. This results in a Pell Grant refund. Let’s discuss how you can get that money back and what you can do with it.
What is the Pell Grant?
The federal government offers Pell Grants to any student with demonstrated financial need. The maximum Pell Grant award for the 2021-2022 year is $6,495. Students do not need to repay the award, which differentiates it from federal loans.
Note that the maximum amount awarded through a Pell Grant can vary from year to year and individual students’ grants will be dependent on their Expected Family Contribution or EFC.
Read more about: Pell Grant eligibility- do you qualify?
Who receives a Pell Grant refund?
The federal government distributes Pell Grant funds directly to your school. The school then has the authority to apply Pell Grant funds towards your tuition, fees, room, and board. For the vast majority of students, the entire Pell grant is applied towards these expenses. But if your expenses are less than the total of your Pell Grant, you are eligible for a refund. This may occur due to a hefty private or institutional scholarship.
How do I receive my unused Pell Grant funds?
Different institutions distribute Pell Grant funds at different times. They may distribute the funds at the beginning of the semester, at the end of the Add/Drop Period, or in installments throughout. They are typically distributed by the financial aid office. If you have any questions about the timing of your funds, reach out to your financial aid office.
How to spend your Pell Grant refund
Your Pell Grant refund can be paid out directly to you once your institutional educational expenses are all paid. Once you’ve received the payment, you can choose to do whatever you’d like with it. However, you’ll get the best bang for your buck if you spend it on other educational expenses.
Your Pell Grant refund will be exempt from taxes if you spend it on other educational expenses. These include books, a computer, transportation, or other expenses directly related to your education. Unless your scholarship also covers these costs, it’s a good idea to use your Pell Grant to pay for them. If you have to report your Pell Grant on your taxes, you’ll lose a substantial chunk of it.
You can use your Pell Grant to pay off the principal of your student loans tax-free. However, if you use them to pay off interest, they will be considered taxable income. No matter which educational expense you choose, make sure to keep documentation of your spending. You’ll want to be able to prove that you can deduct your refund from your taxes.
Don’t miss: How to complete this year’s FAFSA
Breaking it down
If you are eligible for a Pell Grant refund, you have done well in your college financing! Students receiving a Pell Grant refund must be paying less than $6,495 per year in expenses. Whether you accomplished this through private scholarships or an institutional prize, you are paying far less than the average American. You will receive your Pell Grant as a direct payment from your school. You can choose to do whatever you’d like with the money. But remember, you’ll have to report it on your taxes if you don’t use it for educational expenses.