Pell grants are issued by the federal government to students who demonstrate need. They max out at $5,730 per school year (as of 2015) and do not require the student to pay back a single cent. A student automatically applies for a Pell Grant when she completes a Free Application for Federal Student Aid form, or FAFSA, which also makes her eligible for federal subsidized and unsubsidized student loans. A student may receive a Pell Grant for up to 12 semesters.


The amount of a Pell Grant award is calculated by factoring in several criteria, including the cost of the school attended, the contribution toward tuition expenses made by the student's family, the income of an independent student and her status as a parent or single parent, whether the student is attending college full time or part time, and whether the student completes the classes she signs up for. If the student withdraws early and does not complete her classes, she has not fulfilled her part of the deal and all or part of the Pell Grant may have to be repaid to the federal government.