In all the hubbub around FAFSA® Simplification, we haven’t really had time to talk much about the new methodology for awarding Pell Grants. Throw your Pell charts away and read on for the three steps to a Pell grant.
Step 1: Determine the Maximum Pell Grant Eligibility.
Annually, by February 1, the Department of Education (ED) will provide the minimum and maximum Pell Grant eligibility for the upcoming award year. For 2024-2025 the maximum is $7,395 at this writing. We say at this writing because in its January 31 Dear Colleague Letter (DCL ID GEN-24-01), ED adds the caveat that this amount is subject to change as the current funding level is set to expire on March 8, 2024, and Congress would need to extend this date at least until September 30 to fund at this award level.
If any of the following conditions are true, the student will be eligible for the maximum Pell Grant amount regardless of the calculated Student Aid Index (SAI):
- The (independent) student and spouse (if applicable) or the (dependent) student’s parents are not required to file a federal tax return. In this case, the student is assigned an SAI of –1500.
- The (independent) student or the (dependent) student’s parent is a single parent with an adjusted gross income (AGI) from their base-year federal tax return that is greater than $0 but less than or equal to 225% of the federal poverty guideline for the family size and state of legal residence reported.
- The (independent) student or the (dependent) student’s parent is not a single parent and has an AGI that is greater than $0 but less than 175% of the federal poverty guideline for the family size and state of legal residence.
For the last two bullets, the student will be assigned an SAI of $0 or the calculated SAI in step 2, whichever is less.
Also, students who meet these conditions will have a Maximum Pell Indicator = 1, 2, or 3, respectively, on their ISIR.
Step 2: Calculate the Student Aid Index.
See the 2024-2025 Student Aid Index (SAI) and Pell Grant Eligibility Guide for more details around calculating SAI. And read our August 2023 blog “Move Over EFC, Here comes SAI (in 2024/2025),” which discusses the differences and similarities to the ‘old’ EFC calculation.
A student’s Pell Grant eligibility based on the calculated SAI is determined as follows:
- If the SAI is 0 or negative, the student is eligible for the maximum Pell Grant.
- If the SAI is greater than 0 but less than the maximum Pell Grant eligibility, deduct the SAI from the maximum Pell. Let’s use some real numbers…the SAI is 1000 and the Pell maximum for 2024-2025 is $7,395, so the student’s eligibility is $6,395. Unless…
- If the SAI is greater than the maximum Pell minus the minimum Pell Grant eligibility ($740 for the 2024-2025 award year), the student is not eligible for Pell under Step 2. So, let’s say the student’s SAI is $6,800. That’s under the maximum Pell, but by less than the amount of the minimum Pell ($7,395-$740 = $6,655), so we’re not done calculating yet!
Step 3: Determine the Minimum Pell Grant Eligibility.
Regardless of the calculated SAI, a student may be eligible for the minimum Pell Grant if any of the following are true:
For dependent students:
- The student’s parent is a single parent with an adjusted gross income (AGI) from their base-year federal tax return that is greater than $0 but less than or equal to 325% of the federal poverty guideline for the family size and state of legal residence reported.
- The student’s parent is not a single parent and has an AGI that is greater than $0 but less than 275% of the federal poverty guideline for the family size and state of legal residence.
For independent students:
- The student is a single parent with an adjusted gross income (AGI) from their base-year federal tax return that is greater than $0 but less than or equal to 400% of the federal poverty guideline for the family size and state of legal residence reported.
- The student is a parent but is not a single parent and has an AGI that is greater than $0 but less than 350% of the federal poverty guideline for the family size and state of legal residence.
- The student is not a parent, and the student (and spouse if applicable) has an AGI that is greater than $0 but less than 275% of the federal poverty guideline for the family size and state of legal residence.
A minimum Pell eligibility flag of 1 – 5, respectively, will be returned when one of these conditions is met. The calculated SAI should be used to determine eligibility for all other types of financial aid.
At this point, if you’re still following along, you may be asking, ‘Why do I need to know all of this when my FAMS will do the calculations?’ Our answer to that is how can you know your FAMS is calculating awards properly if you don’t know what they are supposed to be? Suffice it to say, before a single award letter goes out the door, you should be testing both the SAI and Pell Grant calculations thoroughly. This stuff is as new for FAMS developers as it is for financial aid administrators, so testing is critical. Read more about system testing in our blog “Testing 1…2…3.”
Don’t let the stress of all these changes (never mind the delay in getting ISIRs!) get you down. The Higher Education Group can support your office in numerous ways – from interim staffing to staff training and more. Visit our website or email info@heag.us for more information.