What Happens to Unused Pell Grant Money After Graduation?

A Pell Grant can still be useful after graduation.

Image courtesy of College Finance. 

A Pell Grant is a need-based grant given primarily to undergraduate students. It is for students who are documented to have extreme financial need, who have not earned a degree before. Unlike a loan, a grant does not need to be repaid. It is meant as a gift so that students in need can still accomplish their career goals despite their lack of money. 

The amount that a student gets for a Pell Grant depends on several factors. It depends on how much they or their parents make, whether they are classified as a dependent or independent student, or how many dependents they or their parents have. Some students are eligible for very large state sponsored grants, and may even have some money left over after their tuition is paid. So what happens to that Pell Grant money after graduation?

A Pell Grant is sent directly to a student’s school, and before it ends up in their hands, the school first uses it to pay off the student’s tuition and basic expenses. After the school has paid off all your basic tuition expenses, they will then give the student a refund check so they can use it on other necessary expenses. The school will make sure to pay off what it needs to before the grant money ends up in the hands of a student. When you get Pell Grant refund money, you can be sure that all your school expenses have been taken care of. 

A student can receive Pell Grants for up to 12 semesters. As long as a student hasn’t been in school for more than 12 semesters, they are eligible to receive Pell Grants based on need. They will also only be given for one school at a time. 

If a student is enrolled in two different schools at the same time, the Pell Grant will only be awarded for one of them. Most Pell Grant money is awarded to students with families who make under $20,000 per year, but they can still be eligible if their parents make under $50,000 per year. Students who are classified as independent will have their needs assessed based on their own income.

The maximum amount that a single student can receive for a Pell Grant changes each year. That change depends on the amount of funding that the Pell Grant program is receiving that year. From 2021 to 2022, the maximum Pell Grant amount that could be awarded was $6,495. The amount is the same for the 2022 to 2023 school year. Part-time students also receive much less than full-time students. Many different factors are taken into account when Pell Grants are disbursed. 

While you’re still in school, it can be easy to figure out what to do with that extra Pell Grant money. You can use it for books, transportation, food, and for any expense that is related to your schooling. Your school gives you that extra money so that you can use it to further your education, not necessarily so that you can spend it on anything that you may want to buy. So what happens to your extra Pell Grant money after you’ve graduated, then?

Where Does Your Pell Grant Money Go?

The process is much simpler than you think. 

Three glass jars with different labels filled with coins sitting under a small umbrella.
That leftover money can be put to good use. Image courtesy of College Finance

Once you have graduated college, any Pell Grant money that you may have expected in the future will not be disbursed. You can only have access to Pell Grant money when you are enrolled full-time or part-time into an undergraduate program. When that is no longer the case, there will be no more Pell Grant money added to your file since you will have no current expenses to take care of with the school. 

This grant isn’t applied towards post graduates and their expenses. So if you were expecting a certain amount of Pell Grant money in the future, but then graduated before you could receive it, you shouldn’t expect to be getting it at any point. 

Since this grant is reserved for undergraduate students, you will mainly end up with extra Pell Grant money after graduation if you did not use any of the grant refund money that your school gave to you during the semester. In this case, you can resume using your Pell Grant money, but instead of it being free money, you will have to report it on your taxes as income. 

You are not limited to spending it on school expenses now that school is over, but it is no longer just grant money since the purpose it was sent to you for no longer applies. Treat the money as if it were a paycheck and keep in mind that you have to pay taxes on it. But this isn’t a very big downside even though it may sound like one. Pell Grant money still gives a former student access to more than they could’ve had if they had to completely fend for themselves. 

Even though you might have to report your additional Pell Grant money as income on your taxes, it is still providing you with a substantial financial benefit. It will be like getting a paycheck despite not having gotten a new job. The taxes won’t seem like an issue when you recognize how much even the smallest amount of money can help you succeed directly after college. You can put it towards your housing, your meals, and even your recreational expenses. You can spend it on whatever you consider necessary to sustain your lifestyle. Just like with income from a job, what happens to the money you get all depends on you. 

A large group of college graduates throwing their caps in the air.
These students are all ready to start a whole other journey now that classes are over. Image courtesy of Saucy Joe’s

It is not common for someone to receive extra Pell Grant money after graduation. The only way you would have that money at the moment you graduate is if you simply had not spent it by the end of your last semester. Even though that money is supposed to be used on school expenses, once most schools give it out as refund money, they don’t normally pay much attention to what happens to it. What you use it on is really up to you once you are done with your school expenses. 

You will likely have enough work or job search related expenses once you leave school. Work expenses are related to your schooling so it makes sense to spend leftover Pell Grant money on those. Finding work with your degree is another expense towards your future and if you have Pell Grant money left over, you should use it to make your job search easier. When job hunting, you need to pay for professional outfits, transportation, and any necessities you need to make it through the day. It is not easy to find steady employment when you’re struggling for cash. 

Extra Pell Grant money can make it so you can support yourself for a short period of time. It won’t last forever, but depending on the city you live in, it can go a long way. You might even be able to pay for housing costs for a few months. You can feed yourself, pay your bills, and go out and look for work without having to have a job to support yourself in the meantime. 

That will mean that you can dedicate all of your time to your job search. It is even easier to get a job when you treat the process as if it was a job itself. A full time job hunt can potentially lead to the best results. Your days can be spent doing research, writing cover letters, and going on multiple interviews rather than working a job you don’t want and being too burned out to do very much job hunting after work. 

When your mind is free to focus on your main objective, it makes everything much easier in your life. And since this situation will only be temporary, you should make the absolute best out of it if you have been fortunate enough to end up with additional Pell Grant money after you graduate.

Stock up your professional wardrobe, get yourself adequate amounts of food, and fill up your gas tank. Anything that you can spend that Pell Grant money on will benefit your future greatly. If you take advantage of this situation as much as you can, you may end up with a job after college a lot sooner than you may have if you also needed to work a full-time job  just to pay the bills in the meantime. 

Pell Grant money is meant for school expenses, but when you have a good amount leftover, even after graduation, the money is yours to do what you wish with. And while you can use it to do just about anything, it is ideal for you to continue using it to further your career prospects once school is over.

Stacey Fleurime
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