The Basics of Pell and Campus-Based Aid
Two of the most common forms of federal student grant aid are the Pell Grant and campus-based aid, usually in the form of federal Supplemental Educational Opportunity Grants (SEOG) and Federal Work-Study (FWS).
Perhaps the most well-known federal financial aid program, the Pell Grant program has offered financial support to low-income students for decades since it was established in 1972 with the reauthorization of the Higher Education Act. Today, approximately 7.1 million college students receive Pell Grants, one-third of whom attend community college. The amount of a student’s Pell Grant is primarily determined by that student’s Expected Family Contribution (EFC) and enrollment intensity. Eligibility is determined by student and family information submitted using the FAFSA. Students enrolled less than full-time can still access Pell Grants, but are not eligible for the full grant amount. They will receive an award based on the number of credit hours taken in a semester. It can therefore benefit students to enroll full time, as they can receive more Pell Grant funding while accelerating their progress toward a credential.
Students can only receive Pell Grants for the equivalent of 12 semesters (or six years) of full-time study, known as the Lifetime Eligibility Usage (LEU). If a student reaches the maximum LEU while enrolled, they will no longer be able to receive a Pell Grant, even if they have not completed their program and have financial need.
Students are eligible to receive support for up to 24 credits or the equivalent clock hours. Hence, if a student takes 9 credits in the fall and 9 in the spring you’d have 6 remaining to take classes in the summer. In the 2017-2018 academic year, year-round Pell will be reinstated and students can receive up to 150% of a maximum award. Meaning they could take up to 36 credits or the clock hour equivalent. This would come in the form of an additional disbursement of grant aid.
Federal Student Aid programs are wholly funded by the federal government and are entitlements – meaning institutions are required to offer aid to eligible students. There are a few programs, however, that fall under the umbrella of campus-based aid. The Federal Work-Study (FWS) Program was established in 1964 by the Economic Opportunity Act, and the Supplemental Educational Opportunity Grant (SEOG) was established a year later by the Higher Education Act. These programs all have a cost-sharing component, with the federal government and institution each providing a share of the funding. Campus-based aid programs do not operate like entitlements, although they do take into consideration student need. This allows financial aid administrators greater flexibility in awarding funds, but also means that students with unmet need may not receive an award under any of the campus-based aid programs.
The federal SEOG program is often used to supplement Pell Grant funding for students with significant financial need. Although there is no EFC guideline as there is with Pell, financial aid administrators must prioritize Pell students when awarding SEOG. Students can receive up to $4,000 per year and there is no aggregate cap or semester limit. The federal government distributed $733.1 million in SEOG funds the 2016-17 academic year, $151.1 million (20.6 percent) of which went to students in public two-year institutions.
Participating institutions are generally required to match one third of SEOG funds received from the federal government. Federal funds are allocated to institutions using a “base guarantee,” which provides colleges with funding based on what was received in the previous year. Any additional federal funds that are not distributed via the base guarantee are allocated using the “fair share” allowance, which apportions funds to colleges based off students’ unmet needs. The campus-based SEOG funding formula disproportionately benefits higher cost, four-year institutions. Many of these colleges have participated in the campus-based programs since their inception, which ensures they receive substantial funds under the base guarantee. Furthermore, these colleges also benefit from the fair share allowance, as students at higher-cost institutions have significantly greater unmet educational needs than students at lower cost institutions. As a result, the average SEOG award for a community college student is 60 percent of what a student at a four-year public college receives and is less than half of the average award at a private four-year institution.
Federal Work-Study is a fundamentally different program from other types of federal financial aid. Instead of receiving an upfront award, students are instead awarded a potential maximum depending on when they apply, their level of financial need, and their school’s funding level. They earn their pay through hourly work at the college or with a partnering employer. Institutions (or the student’s employer) are required to contribute up to 50 percent of the student’s pay, with the federal government providing the rest. However, some FWS positions – such as math and reading tutors – can be paid up to 100 percent by federal support. Students in the FWS program must have demonstrated financial need and earn at least the federal minimum wage.
Federal Work-Study funds are allocated in a similar manner to SEOG funds. More funds are allocated to four-year public and private institutions and more students at those institutions receive income through the FWS program. So, while the average earnings for students at community colleges is more than those of students at four-year public and private institutions, three times as many students at four-year publics and four and a half times as many students at four-year privates benefit from those earnings according to analysis by ACCT using 2016 U.S. Department of Education data.
For more information, please see ACCT's Financial Aid 102: An Updated Guide to Understanding Federal Financial Aid Programs for Community College Leaders and Trustees (2017).
Jacob Bray is an associate writer for the Association of Community College Trustees.