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Several years ago, a federal grant could have covered all fees and tuition for students in the most need. Even though college costs have risen significantly in the last decade, the Pell Grant’s effectiveness has been reduced to a fraction. In the 1980s, my mother relied heavily on the Pell Grant to support her three […]


Several years ago, a federal grant could have covered all fees and tuition for students in the most need. Even though college costs have risen significantly in the last decade, the Pell Grant’s effectiveness has been reduced to a fraction.


In the 1980s, my mother relied heavily on the Pell Grant to support her three children and work full-time. She commuted to work and to school from the next town. The maximum Pell Grant back then would have covered more than average tuition and fees at four-year public institutions. In the early 2000s I did the exact same thing, earning my undergraduate degree in retail while raising my daughter as a single mother. The maximum Pell Grant then covered 91% of these costs. It now covers 68%, some decades later.


Pell isn’t just for traditional students like me and my mom, it also applies to lower-income students. Pell distributed $26 billion in the 2021-22 school years. However, that money isn’t going as far as it used to. This increases the student and parental debt burden for those who are able.


After inflation adjustment, the cost of college has increased 64% over the last 20 years. Only 6 %.


NOTE: The maximum Pell Grant award in the 2023-24 school years will be $7,395, an increase of $6,895 from 2022-23.


Grants are considered, and unlike loans, “free money” for college. They don’t have to be repaid. Because they are limited in number, grants are only available to students who most need it.


Student can be eligible for grant aid from federal and state institutions, as well as private sources. Students can also borrow student loans to cover any remaining financial needs.


This gap between grants and the actual needs has increased, leading to an increase in student loan dependence. The National Center for Education Statistics reported that 57% of dependent students, those who rely on their parents, relied on student loans in 2016, compared to 44% in 1996.


However, this doesn’t mean that grant aid isn’t increasing in general. In fact, the total grant distribution more than doubled between 2001 and 2021 school years. The fastest growing grant type was institutional grant aid, which is the money that schools receive directly.


The information students submit each year to the Free Application for Federal Student Aid determines how much of a Pell Grant or other need-based grant they are eligible for. For the 2024-25 school years, big changes are planned, including simplified FAFSA forms and expanded eligibility for Pell based on poverty guidelines. Both of these improvements are welcome.


Goal: Graduating with less student loan debt

Maximizing grant aid doesn’t just mean paying for school (and graduating without as much debt), but also increasing your chances of graduation. Financial stress can be distracting from learning. Students can be forced to leave school if they cannot afford college or have to take on substantial debt.

Complete the FAFSA application as soon as you can. The FAFSA is required to be completed every year. It will determine if a student is eligible for federal student loans and grants. Although the application opens in October for the next school year, the Department of Education has already delayed the updated FAFSA until December. Parents and students should fill out the application immediately for each year that the student is planning to attend school.

Every year, apply for scholarships. High school seniors should apply for scholarships at all levels for any institution they are considering. However, the pursuit of scholarship money should not stop once they have reached their first year of college. Keep looking for scholarship opportunities offered by schools, community organizations, parents’ employer, and other sources. You can start with the Department of Labor’s Scholarship Locator.

Parents: Be careful before you borrow money to pay for your child’s education. Over the past decade, the number of parents using Parent PLUS loans has increased in tandem with student loans. Parents who borrow money to pay for college may be putting their financial future at risk. Parents need to prioritize their retirement savings before they borrow.