Beginnings

• Congress created the Higher Education Act of 1965 to give post-secondary education students financial assistance for school costs. In 1972, Congress amended the act and added the Basic Education Opportunity Grant to help students who had financial difficulties afford school. In 1980, the grant was renamed the Pell Grant in honor of the grant's principal sponsors, the late Senator Claiborne Pell of Rhode Island.
  
  

Eligibility

• Pell Grants are not loans; they are a renewable form of financial aid awarded to undergraduate students and do not have to be paid back. Eligible students must be enrolled in an approved school in a degree program or in a professional trade program that culminates in a certificate. Graduate students and those taking individual courses are not eligible for the Pell Grant. Students receiving the grant for the first time after July 1, 2008 are limited to 18 semesters in awards.
  
  

Application

• Pell Grants are need based, with the amount awarded dependent on the student and his family's financial situation. The maximum award for the 2010-2011 and 2011-2012 school years was $5,550. Any student who wishes to get financial aid must fill out a FAFSA, or Free Application for Federal Student Aid, form that records income information among other data. The federal government looks at that information along with the school tuition and fees and then determines the EFC, or Expected Family Contribution, for that student. Those with an EFC under the maximum cutoff are eligible for at least some Pell grant money. The amount of EFC available determines the percentage of Pell Grant money for which a student is eligible. Students with the lowest amount of EFC are determined to be the ones with the most need and receive the full amount.
  
  

Dispersal

• On the FAFSA, students must designate which schools they are attending or considering. While some schools arrange for the money to be sent directly to the student, most arrange for the grant money to come directly to them. Schools are required to notify each student how, when and the amount they will receive in Pell Grant money. All additional financial aid, such as loans, are determined using the balance due after the Pell Grant award.