Everything To Know About Pell Grants And Student Loan Forgiveness
Pell grants are rewarded to undergraduate students seeking bachelor's degrees who qualify because of low family income.
Since President Biden announced unprecedented student loan forgiveness on Wednesday, much of the talk around the nation has focused on student debt, whether or not it’s the right move, and what exactly pell grants are. In making the big declaration, many have questioned why pell grant recipients were given a larger chunk of debt relief than other borrowers. To better understand the move, let’s take a look at what these are, who qualifies, and the reasons why individuals receiving them may have been allotted more relief.
What Is A Pell Grant?
Pell grants came into existence in 1965. Created under the Higher Education Act, these federal government subsidies were created specifically for undergraduate students striving to attain bachelor’s degrees or post-baccalaureate programs. Additionally, these scholarships were reserved for students with the greatest financial need.
Currently, qualifying students can receive up to $6,895 annually for up to six years. This amount was raised by $400 last year under the Biden administration. However, during his State of The Union address last March, the 47th President urged congress to consider increasing the annual limit significantly.
During that speech, Biden pressed Congress to increase the maximum pell grant amount by at least $2,000. Only $400 was approved, which kept pace with the usual increments. However, the 79-year-old made a note in his speech that the program has not kept pace with inflation and the rising costs to obtain an education. When first launched, these scholarships covered roughly 80% of college costs, according to a report from The Conversation. Today, that pays for less than 30% of the same expenses.
Who Receives Them?
In most cases, undergraduates continuing their higher education journey to earn master’s degrees and doctorates qualify for a pell grant. This is because the costs of these degrees are exceedingly higher than others. While there is no income gap to receive this subsidy, data shows how the majority of recipients come from a family that earns less than $60,000 a year.
To obtain funds under a pell grant, students have to first apply for a Free Application for Federal Student Aid (FASFA). This determines who receives them by looking at family income, assets, the number of children a family has enrolled in college, and more. Additionally, students of color are historically known to have a higher chance to be rewarded.
Why Were Pell Grant Recipients Given More Forgiveness?
To put it simply, the decision to give pell grant recipients $20,000 in student loan forgiveness as opposed to other federal loan borrowers who were allotted $10,000 appears simple. The majority of individuals who fall under this category tend to hold the highest amount of student loan debt in America. Income gaps still apply, so those who make more than $125,000 will be excluded from having this amount wiped from their loans.
Recent pell grant recipients may have been given close to $7,000 in scholarship money, but that does little to whittle away at the massive amounts of money they tend to take out in student loans. For example, The Associated Press highlights one student who will benefit from this measure, Lynn Hunt. A recipient of the grant, she borrowed roughly $50,000 to attain her degree as a data analyst. Because of interest, today, she owes $70,000 altogether. To someone like Hunt, the allotted amount for pell grant recipients still does little to cut down on debt.
Not everyone agrees with Biden’s decision to cancel debt. However, many pell grant college grads are applauding the act that will give them some relief. For individuals unsure of whether or not they ever received pell grant funds, they can log into their Federal Student Aid account here, and check what grants and loans they have received in the past.
