What is a Pell Grant and who can qualify for one? Biden’s student loan forgiveness plan

The White House has finally announced details of President Biden’s long-awaited student debt forgiveness plan, which will knock off a substantial amount for borrowers currently earning less than $125,000 per year.

Biden was eager to cap eligibility for the debt relief to avoid giving wealthy graduates an unnecessary reduction on their loans. Aside from a $10,000 write-off for those earning less than $125,000, the new measures will also provide an additional $10,000 for recipients of Pell Grants.

We take a look at what that means and which students are likely to be eligible for the additional relief…

What is a Pell Grant?

The Higher Education Act of 1965 first introduced Pell Grants to the American education system and they remain the largest source of federal financial aid for students. They are designed to offer additional support for students who may not otherwise be able to afford college living expenses.

More than 93% of Pell Grant recipients come from families with a combined income of less than $60,000 per year. Two-thirds of beneficiaries come from households that earn less than $30,000 per year.

The ethnic split of Pell Grant recipients also speaks to the economic disparity between certain groups in the United States. Black students are twice as likely to be eligible for the support than white students. Since it was first introduced, around 80 million people have benefitted from the support.

“For 50 years, Pell Grants have been a key way for the federal government to help lower-income families, particularly those earning less than $60,000 a year, to send their kids to college,” Biden said, in a speech to announce the student debt forgiveness.

Pell Grant recipients make up more than 60% of the total number of borrowers with outstanding debts, meaning that a significant proportion will get $20,000 in student loan forgiveness.

Who is eligible for a Pell Grant?

The additional support is broadly designed to help borrowers with the costs of university, so there are a number of criteria that applicants must satisfy. Eligibility, and the amount that the recipients will receive, is based on these factors:

- Expected family contribution

- The cost of attendance

- Whether the applicant is a full-time or part-time student

- Planned duration of study

As a general rule Pell Grants are awarded to undergraduate students who have not earned any other higher education qualification. However some postbaccalaureate teacher certification programs are eligible for Pell Grants.

For full eligibility requirements, the Federal Student Aid website outlines the criteria.