What is a Pell Grant?
How Do I Get a Pell Grant?To be considered for a Pell Grant, you must fill out the FAFSA (Free Application for Federal Student Aid). The FAFSA asks questions about you and your family’s financial circumstances in order to ascertain how much you can afford to pay for college. The federal government then takes that information to determine the EFC – or Expected Family Contribution.
How Does a Pell Grant Affect My Taxes?
• The Pell Grant is used for qualified education expenses only. Qualified expenses is defined by the federal government as tuition, fees, books, supplies and equipment required for your courses. You’ll notice that room and board is not included as well as transportation to and from school. If your Pell Grant is used for unqualified-education related expenses like room and board and transportation, the amount you spend will be treated as income. As you ask yourself how does a Pell Grant affect my taxes, you’ll find that you have to report unqualified education related expenses on your taxes. For example, if you received a $4,000 Pell Grant and used $1,000 of those funds on room and board, you would have to report $1,000 income on your taxes. However, just because you report it, doesn’t necessarily mean that you’ll have to pay taxes on it. There are other factors to consider, such as other income you report, your filing status and the deductions and credits for which you’re eligible.