Return Pell Funds for 2012-13

Not too long ago, the Dept of Ed announced that students were able to return unnecessary portions of their Pell Grants for future use. The main reason for this is because of the Lifetime Eligibility reduction. The thought was because students can only use a certain amount of Pell in their lifetime (now 600% instead of the old 900%), they may want to return unused portions for future use. Of course, it's not as simple as it sounds.

1. They can only return funds that have been disbursed in the current award year, so nothing from previous award years. If the disbursement hasn't been made, they can decline a disbursement to be made.
2. They have to return it to the school, and then the school will refund the money.
3. The students has to submit signed statements to the school, saying that they understand that the money they are refunding (or declining) is going back to the government, and also acknowledging that the Pell Grant funds may not be available after the award year is over. They may not be available if their Pell Grant awards change. Since the Lifetime Limit is according to percentage rather than amount, if your full pell is $5550 as opposed to a full pell of $3000, a quarter disbursement would be $1850 and $1000 respectively, but they are both 33%.

The Dept of Ed has said that they won't question students who choose to do this, as long as the necessary paperwork has been submitted. This is effective for the 2012-13 award year, but there is no word as to if the 2013-14 award year will also fall under this.

We'll see how many people actually do this. If you think/know that you're going to receive a higher Pell Grant in the following year, and you don't want to burn your eligibility on a small Pell Grant, then that could be a strategy if you have something else to supplement the Pell you are declining. On the other hand, I don't know many people who will turn down grant money from the government. Just remember that it's an option.