One of the final pieces of the FAFSA Simplification Act has arrived, and with it, changes to Pell Grant processes beginning in the 2024/25 academic year. As the new award year unfolds, it’s crucial that your financial aid office is prepared to implement new compliance processes and updated calculations. McClintock’s compliance team has been dedicated to helping schools make the transition as smoothly as possible, launching webinars, tools, and updates over the past year. This article summarizes the major changes — a helpful jumping-off point for identifying gaps in your institution’s processes.
Pell Grant and IASG Consolidation
One of the most significant updates in 2024/25 is the consolidation of the Pell Grant and Iraq and Afghanistan Service Grant (IASG). Previously managed separately, their Lifetime Eligibility Used (LEU) percentages will now be combined starting in Spring 2024. This means that students who reach or exceed a 600% combined LEU will be ineligible for further Pell Grant funding. However, these students will not be considered overawarded, a subtle yet critical distinction for financial aid administrators.
Understanding Pell Grant Eligibility
Students may qualify for Pell Grants in one of three ways:
- Maximum Pell Grant (Max Pell): Determined annually by the Appropriation Act, the Max Pell Grant for this year is set at $7,395. A “Y” flag on the ISIR will indicate eligibility for this maximum award.
- Calculated Pell Grant: This is based on the Student Aid Index (SAI), which replaces the EFC for the 2024-2025 award year. The SAI will determine Pell Grant eligibility for students without the maximum Pell Grant flag.
- Minimum Pell Grant (Min Pell): The minimum award is 10% of the Max Pell Grant, amounting to $740 this year. The ISIR will similarly flag eligible students with a “Y” for this minimum award, if the student does not qualify for the maximum Pell Grant flag or based on their SAI.
Elimination of Payment and Disbursement Schedules
A significant procedural change this year is the elimination of Pell Grant payment and disbursement schedules. Instead of using enrollment statuses (e.g., full-time, half-time), schools will now calculate payments based on enrollment intensity, with the calculation rounded to the nearest whole percent. This shift requires adjustments in how institutions calculate and manage Pell Grant funds.
New Pell Grant Rounding Rules
Pell Grant calculations now employ rounding rules for the Scheduled Pell Award amount, now rounded to the nearest $5. For calculating enrollment intensity, round to the nearest whole percent.
Pell Grant Cost of Attendance (COA)
When it comes to the Pell COA, most institutions will not see a significant impact unless their tuition costs for a full-time, full-year student fall below $7,395. However, for community colleges and lower-cost programs, the Pell COA could influence grant calculations, particularly for students enrolled less than full-time.
Your Pell COA will always be based on a full-time full year student’s tuition cost plus the appropriate indirect costs. For students with mixed enrollments (See Volume 7, Chapter 3, Example 6), the indirect costs would be reduced for students who are less-than-full-time depending on certain limitations, but the tuition component would remain at full-time full year amounts.
The McClintock Pell Grant Calculation Tool
Changes to the 2024/25 Pell Grants include updates to three major formulas (Formulas 1, 3, and 4). In response, McClintock developed a tool that helps schools make Pell calculations under the new rules. Our package also includes a video webinar that answers common Pell update questions and walks through the calculator.
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Year-Round Pell Grant Policy Update
Finally, a significant update to the Year-Round Pell Grant policy removes the requirement for students to be enrolled at least half-time during the term in which they exceed 100% of their Scheduled Award. This change offers more flexibility for students but requires careful monitoring by financial aid offices to ensure compliance.
McClintock is Your Partner in Higher Education
At McClintock & Associates, we’re here to help you navigate these changes with confidence. Higher education is all we do. Our deep bench of expertise can help your school update systems and processes, smooth staff turnover, and even assist with the rapid processing of student records.
Have questions? Need help transitioning Pell Grants or any other Title IV process? Reach out today and start a conversation.
