With college costs are rising at twice the rate of inflation, every source that can help you pay for college is worth considering.

One of the numerous potential sources of financial aid for college students is a Federal Pell Grant. This grant is a form of need-based financial aid, and unlike a loan, the money does not have to be repaid. Eligible students receive a specified amount each year under this program.

Eligibility
The U.S. Department of Education uses a standard formula to evaluate the information a student supplies when applying for a Pell Grant. This formula produces an EFC (expected family contribution) number, which will determine if the student is eligible for the grant. Applicants must be undergraduate students who have not earned a bachelor's degree. Each applicant must be a U.S. citizen or an eligible noncitizen and needs to have a high school diploma or a GED or to demonstrate the ability to benefit from the program.

Award Amount
The maximum Pell Grant for the 2007-2008 award year (July 1, 2007 – June 30, 2008) is $4,310. While the maximum amount can change each year depending on program funding, it has remained at $4,050 since 2002. The average Pell Grant per recipient is $2,354. The amount of the grant depends on both the student's EFC and several other factors. These factors are the student's cost of attendance (tuition and fees, room and board, books, supplies, and so on) and the amount of time the student attends school (whether the student goes to school for a full academic year or less and whether the student is full-time or part-time). An eligible part-time student can receive a Pell Grant. The amount awarded, however, will be less than for a full-time student. An applicant may receive only one Pell Grant in an award year and may not receive Pell Grant funds from more than one school at a time.

Disbursement
A school may credit Pell Grant funds to a student's school account, pay the student directly (usually by check), or use a combination of these two methods. The school must notify the student in writing of the amount of the Pell Grant and of how and when payments will be made. Schools must pay at least once per term, whether that is a semester, trimester, or quarter. Schools that don't use formally defined, traditional terms must pay the student at least twice per academic year.

Time Limit
Current regulations pose no limit on the number of years a student can receive a Pell Grant as long as the student remains in a degree program as an undergraduate and does not have a bachelor's degree.

How and When to Apply
Students apply for not only Pell Grants but all federal, state, and institutional financial aid programs (except scholarships) by completing the Free Application for Federal Student Aid (FAFSA). The paper FAFSA is available from high school guidance offices, or the form may be completed online at www.fafsa.ed.gov. The FAFSA must be submitted by the end of June to be eligible for aid in the following academic year.