Will I Lose My Pell Grant If I Get a Stafford Loan?

Knowing how to maximize your financial aid can help make college a reality.

Knowing how to maximize your financial aid can help make college a reality.

As college costs continually rise, students look for any financial edge they can get, including federal aid programs like Pell Grants and Stafford loans. These programs are designed to make the burden of tuition and other academic expenses easier to manage for students who may not have the means to attend college otherwise. Students may be able to use both to help them pay their way through college.

Pell Grants

The Federal Pell Grant program is funded by taxpayer dollars on the federal level and is based on several factors including the cost of your school, the income of the student or his parents, the number of semesters being attended within the school year and the number of classes being taken. The maximum amount per school year that a Pell Grant recipient can receive is $5,550. You can use your Pell Grant for tuition and books, and the grant is applied to the student's balance before any loans, public or private are applied. Pell Grants will automatically be reissued each academic year as long as you take 25 or more credits a year and keep in good academic standing.

Stafford Loans

Stafford loans are issued by the federal government to students with financial need. Stafford loans are available in subsidized and unsubsidized versions. Subsidized Stafford loans do not accrue interest while you are taking college level classes at a rate of at least six credits per semester, while unsubsidized loans will add interest to your balance monthly. Typically subsidized loans are issued first in addition to federal Pell Grants until the financial requirement for your particular school tuition and expenses has been met. If you still require more funding, unsubsidized loans will be issued to cover the rest. Since Pell Grants and Stafford loans are often used in concert, one does not cancel out the other.

Restrictions

The only way to lose your Pell Grant once it has been issued is for one of the following to take place. If your financial status changes and you are no longer in need of the grant to cover tuition costs, it will not be reissued in the following school year. If you are determined to have not graduated high school or obtained your GED, you are not eligible. If you fall below the half-time student threshold which requires that you enroll and attend at least six credits per semester at the college level. If you graduate college with a bachelor's degree you are no longer eligible for Pell Grants. If it is determined that you are not a U.S. citizen or you do not have a valid Social Security number, you will no longer be eligible. If you fail to register with the selective service or you fail to pay a student loan, your Pell Grant will not be issued.

Eligibility

Pell Grant eligibility is determined in the same way and at the same time as Stafford Loan eligibility. The federal FAFSA, or Free Application for Federal Student Aid, is the one form that college students must complete if they wish to obtain federal student aid of any kind, including Pell Grants and Stafford loans. The FAFSA takes into account the student's income, parental income, the school to be attended, the status of the student within the school and the overall need.

About the Author

Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.

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