Pell Grants could rise to a maximum $7,395 next year, in the biggest increase in over a decade

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As part of its massive $1.7 trillion spending package for 2023, Congress is planning to up the maximum annual Pell Grant award to $7,395 — a $500 increase from this school year.

If it passes, that would be the largest jump for the grant in more than a decade.

President Joe Biden had previously called to raise the Pell Grant by even more, to a maximum allotment of $8,670 in 2023, and has said he wants to see the payments double by 2029.

Pell Grants are one of the biggest sources of financial aid available to college students, and more than 6 million students received them in 2020.

Each year, Congress decides how much to allocate to the maximum Pell Grant, and in some years it has reduced the payment.

Here’s what to know about the assistance.

Pell Grants could be worth up to $7,395

In the 2023-2024 academic year, Pell Grants could range from a minimum of about $740 to a maximum of $7,395, depending on how much a college calculates that a student’s family will be able to contribute to their college costs, said higher education expert Mark Kantrowitz.

Currently, the most a student can get a year under the program is $6,895.

In some cases, a student can receive more than the maximum aid for a single year if they’re in an accelerated degree program, Kantrowitz added.

Funds help undergrads from ‘low-income families’

More than 90% of Pell Grant recipients in 2015-2016 came from families with household incomes below $60,000, according to Kantrowitz.

“Pell Grants are intended for very low-income families,” Betsy Mayotte, president of The Institute of Student Loan Advisors, previously told CNBC.

The funding is also typically available only to undergraduate college students.

You can check what funding you might be eligible for at the U.S. Department of Education’s student aid website.

You must submit a FAFSA to qualify

To qualify for a Pell Grant, you have to submit the Free Application for Federal Student Aid, or FAFSA, form. Even families who assume they’re ineligible for aid should apply, experts say.

In some cases, if you’re in school right now and haven’t filed the FAFSA this year, you may be able to apply by the June 30 deadline and still get the grant for this academic year.

There’s a limit to how many Pell Grants you can get

College students typically can receive the grant for up to six years. That’s important to know, considering more than half of undergraduates take more than four years to graduate.

How aid is paid depends on your college

At most colleges, the grant is given out in two disbursements, at the start of each term, Kantrowitz said.

“However, many colleges prefer to make monthly or biweekly disbursements,” he added. “This is often called ‘Pell as a paycheck.'”

Funds typically cover tuition, but other expenses qualify

Pell Grant funds are applied first to tuition and fees, Kantrowitz said. Any college-owned or -operated housing could also be covered by the aid.

If there’s still money left over after those costs are covered, it’s usually disbursed to the student within 14 days, Kantrowitz said.

“The student can then use the money to pay for other college costs, such as textbooks,” he said.

You usually don’t have to pay the money back

A federal Pell Grant, unlike a student loan, typically doesn’t have to be repaid.

The exceptions are rare, and include cases in which your enrollment status changed from full time to part time or if you left a program early.

This article was originally published by Cnbc.com. Read the original article here.