The U.S. Department of Education has specific rules regarding how a college or university pays Pell grant awards to its students. The method most schools use is to first credit the student's account with the Pell grant award to pay off the student's outstanding expenses such as tuition fees, books and room and board. The school then typically refunds any remaining award amounts to the student by issuing her a check or depositing the money directly into her bank account by electronic funds transfer (EFT).
About Pell Grants
The Department of Education awards Pell grants based on a student's financial need, the total cost of higher education expenses and the amount of credit hours in which the student is enrolled. Students who receive Pell grants do not have to pay them back if they withdraw from classes or after they graduate. Maximum Pell grant awards are subject to change depending on the availability of government funding to the program.
Disbursement Dates
A school may disburse Pell grant funds up to 10 days before the first day of the school in each semester. If the school divides its educational year in sections other than semesters, the same 10-day rule applies. The school may also disburse a Pell grant award after the school's add/drop period passes. The school may make one disbursement per semester or may choose to make monthly payments to the student's account.
Excess Pell Funds
If there are excess Pell award funds after the school credits the student's account, the school can issue a refund check without the student's permission. If the student would like to have his award directly deposited to his bank account through an EFT, he must give permission to the school's financial aid office to do so. If the student leaves school, or otherwise becomes ineligible for the Pell grant before its disbursement, the financial aid office pays the student's outstanding expenses with the school and typically returns any remaining funds to the Federal Pell grant account.
Academic Progress
The school must review each student with a Pell award at the beginning of each semester or payment period for satisfactory academic progress before making a disbursement. If the student does not meet federal satisfactory academic progress standards, the school may choose to put the student on academic probation or not disburse his Pell grant award. To meet satisfactory academic progress requirements, the student must have a 2.0 grade point after attending school for two years and complete at least two-thirds of the amount of attempted credit hours.
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