How do you know if you qualify for $20,000 in student loan relief instead of $10,000? Here’s what we know about Pell Grants and the student loan forgiveness plan.
WASHINGTON — President Joe Biden on Wednesday announced that his administration would move to forgive thousands of dollars in student debt from Americans saddled with the costs of education.
The move would wipe clean up to $10,000 in debt from borrowers making less than $125,000 per year. But for Pell Grant recipients, the White House plans to remove up to $20,000 in debt.
What is a Pell Grant?
A Pell Grant is a federal scholarship offered to students applying to college under exceptional financial hardship.
According to the U.S. Department of Education, they are mostly awarded to undergrad students who haven’t earned a bachelor’s degree yet.
Unlike a traditional loan, most Pell Grant recipients don’t have to pay the money back. The exception to this is students who have dropped out of classes or entirely out of college after their federal aid for that semester has been given.
Under the Biden administration’s new plan, any Pell Grant recipient who currently makes less than $125,000 (the same salary cap as non-Pell Grant borrowers) will get up to $20,000 of their student loans forgiven.
Who is a Pell Grant recipient?
Applying for a Pell Grant requires students to fill out the FAFSA — Free Application for Federal Student Aid — paperwork. For many high school students, this is done around the same time they apply to colleges.
Eligibility is based on a few things, including the cost of attendance for your school, your status as a full or part-time student and your “expected family contribution.”
That expected family contribution is simply the amount of money the federal government expects a student’s family to be able to provide for their education, outside of grants and loans.
How much does a Pell Grant pay for?
Grants vary based on the needs of students. The maximum award for the 2022-2023 school year is $6,895, meaning that a student can receive up to $3447.50 per semester. It’s also possible to receive an additional $3447.50 if a student is taking summer or winter classes outside of the regular semester.
Because tuition at many universities cost significantly more per semester than Pell Grants can provide, students who take them often need to take out loans. With the Biden administration’s announcement, those people will have up to $20,000 of that loan debt wiped away by the federal government.
How do you know if you had a Pell Grant?
For those who can’t remember whether they received a Pell Grant while taking out student loans, one option could be to log onto your FAFSA account or check any e-mails you’ve received in the past that describe your FAFSA.
Jessica Thompson, the vice president of The Institute for College Access & Success (TICAS), told VERIFY borrowers shouldn’t wait to check, to allow more time to troubleshoot if needed.
Thompson also told VERIFY you shouldn’t need to prove to the Department of Education that you received a Pell Grant to qualify for loan forgiveness.
“They should be able to identify, and certainly have the data to know, who has ever been disbursed a Pell Grant,” Thompson said.
The White House has yet to announce if there will be another simplified way for borrowers to check this info, but the Biden administration said more info on claiming relief will be released in the coming weeks.