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Federal Pell Grant Program - Calculating the Federal Pell Grant

AwardYear: 1997-1998
EnterChapterNo: 4
EnterChapterTitle: Federal Pell Grant Program
SectionNumber: 2
SectionTitle: Calculating the Federal Pell Grant
PageNumbers: 9-44


In this section, we will review the basic steps in calculating a Pell
award. These steps, in effect, adjust the Pell award to take into
account the student's cost of attendance (COA) for the academic
year, the student's enrollment status, the ability to contribute to his or
her education (EFC), the amount of coursework taken in the award
year, and the length of the student's enrollment during the academic
year.

[[See Section 3 for special considerations]]
Pell calculations for most programs can be performed by following
the steps in this section. However, there are some situations that
require further adjustments. These situations are discussed in Section
3, "Special Program Considerations." Check that section to see if
these special considerations apply to any of the programs at your
school.

BASIC CONCEPTS

[[Scheduled Award]]
A primary concept in the Federal Pell Grant Program is the
"Scheduled Award," which is the amount a student receives during
an academic year for a given COA and EFC, assuming the student is
enrolled FULL TIME for a FULL academic year. For example, a
student with a COA of $6,000 for a full academic year and a nine-
month EFC of 0 would have a Scheduled Award of $2,700 (the
maximum for 1997-98). A student will receive less than a full
Scheduled Award if he or she is enrolled less than full time or is
enrolled for less than a full academic year. For instance, if a student
attends two semesters as a half-time student at a semester school, the
student would receive half a Scheduled Award. Or, if the student
enrolled full time in a program late in the award year and only
completed half of an academic year in that program, he or she would
receive no more than half of a Scheduled Award.

The concept of the Scheduled Award has always been important
because it has limited the student to a maximum payment for an
award year. The Scheduled Award cannot be exceeded, even if the
student transfers to another school or attends for more than one
academic year in the award year (for example, by attending a
summer session).

[[Annual award]]
The annual award is the maximum amount (from the appropriate
Payment or Disbursement Schedule) a student would receive during
a full academic year for a given enrollment status, EFC, and COA.
Note that for a full-time student, the annual award will be the same
as the Scheduled Award.

[[Award year]]
The award year begins on July 1 of one year and ends on June 30 of
the next year.

[[The graphic on page 4-10 is currently unavailable for viewing. Please
reference your paper document for additional information.]]

As already noted, a student cannot be paid more than one Scheduled
Award for an award year. The regulations provide that students may
receive up to a second Scheduled Award during a single award year
if the Department determines that sufficient funds are available.
There is no funding for payment of a second Scheduled Award for
1997-98; therefore, students will not be able to receive more than
one Scheduled Award for the 1997-98 award year.

[[Academic year]]
The academic year is used to measure the amount of coursework the
student will complete during the award year. The school must define
the academic year for each program of study; once it has defined the
academic year for that program, it must use that definition for all
SFA purposes. A school's defined academic year must contain at
least 30 weeks of instructional time; within the weeks of the
academic year, a full-time student must be expected to complete at
least 24 semester or trimester hours or 36 quarter hours at a school
measuring program length in credit hours, or at least 900 clock hours
at a school measuring program length in clock hours. The General
Provisions regulations provide a definition of academic year and
allow schools to apply for a waiver of the 30 week minimum. (See
Chapter 3, Section 1 for more information on the definition of
academic year.)

[[Calendar weeks vs. weeks of instructional time]]
Note that for the Pell calculations, the school will need to determine
how many weeks of instructional time are in the program or
academic year, or in each term if the school uses terms. In some
cases, the weeks of instructional time will not be the same as the
number of calendar weeks. Chapter 3 explains how to determine
weeks of instructional time. A school should be careful not to use
calendar weeks when it should be using weeks of instructional time.

[[Different academic year for different programs]]
Depending on the academic nature of the programs involved, a
school may define an academic year differently for different
programs of study. For instance, it may set an academic year of 900
clock hours and 30 weeks in one program and 1,200 clock hours and
40 weeks in another. The school may even use a different academic
year for an evening program, as opposed to a day version of the same
program, as long as each academic year meets the minimum
requirements established for an academic year. If the school
establishes separate versions of a program, with different academic
years, but allows individual students to take courses in both versions,
the school must be able to determine which program the student is
actually enrolled in.

[[Standard term and nonstandard term]]
Term-based schools may have either standard terms or nonstandard
terms. STANDARD TERMS are semesters, trimesters, or quarters,
as these terms are traditionally used. In traditional usage, an
individual semester or trimester provides approximately 15 weeks of
instruction and full-time is defined as at least 12 semester or
trimester hours; the program's academic calendar generally consists
of three terms, one each in fall, spring, and summer. In traditional
usage of the term quarter, an individual quarter provides
approximately 10 to 12 weeks of instruction and full-time is defined
as at least 12 quarter hours; the program's academic calendar
generally includes three quarters in the fall, winter, and spring and
often a summer quarter as well. Any other type of term is a
NONSTANDARD TERM. Nonstandard term has sometimes been
used to refer only to terms of unequal length, but under this
definition terms of equal length may be nonstandard terms.

CHOOSING A FORMULA

[[34 CFR 690.63(a)]]
The regulations specify five different formulas for calculating Pells;
the formula the school uses depends on the type of program.
However, each formula has the same basic steps. Once the school
chooses a formula, the school must use that same formula for all
students in the same program of study for the entire award year.

[[Formula 4 or 5]]
Three of the formulas (Formulas 1, 2, and 3) are used for credit-hour,
term-based programs. Of the remaining two formulas, Formula 4 is
used for all clock-hour programs and for nonterm credit-hour
programs, and Formula 5 is used for students enrolled only in
correspondence courses (not including residential components of
correspondence programs). Calculations for correspondence
programs are discussed separately in Section 3 of this chapter.

[[Formula 3]]
A school can use Formula 3 to calculate Pells for any credit-hour,
term-based program. However, if the program meets certain
requirements, Formula 1 or 2 may also be used. If the program meets
the requirements for more than one formula, the school may choose
which formula to use.

[[Formula 1 or 2]]
To qualify for Formula 1 or 2, the program must

- be offered in semesters, trimesters, or quarters (standard terms);

- use an academic calendar that includes two semesters or trimesters
or three quarters;

- not have overlapping terms; and

- define full-time enrollment for each term as at least 12 credit
hours.

If the program provides at least the statutory minimum of weeks for
an academic year (30 weeks of instructional time, unless the school
has received a waiver from the Department) in the fall through spring
terms, Formula 1 may be used. If it does not provide this minimum
in the fall through spring terms, Formula 2 may be used. Note that in
both cases the school may decide to use Formula 3.

[[Combining terms]]
A school may combine terms to allow a program to qualify for
Formula 1 or 2. For example, a school with several summer terms for
which full-time enrollment is less than 12 credit hours may combine
these terms into a single term for which full-time enrollment is 12
credit hours so that Pells for students in the program can be
calculated under Formula 1. A school may also combine a short term
with a semester in order to have two semesters as required for
Formulas 1 and 2, as the following example shows.

[[The Hart University Example on page 4-13 is currently unavailable
for viewing. Please reference your paper document for additional information]]

[[Calendar changes]]
Because the academic calendar for a program must fall within
specific limits for the school to be able to use Formula 1 or 2, if the
calendar for the program changes, the school may have to check
again to see if it can still use Formula 1 or 2 for the program.

No matter what formula is used, there are five basic steps to
calculating a Pell award:

STEP 1: Determine Enrollment Status

STEP 2: Calculate Cost of Attendance

STEP 3: Determine Annual Award

STEP 4: Determine Payment Periods

STEP 5: Calculate Payment for a Payment Period

We will now discuss each of these steps in more detail. Appendix A
contains step-by-step summaries for each of the five formulas.

DETERMINING ENROLLMENT STATUS

The student's enrollment status is based on the number of credit or
clock hours for which the student enrolls. It determines which cost
components are used to calculate the student's Pell COA and, for
some programs, establishes which Payment or Disbursement
Schedule is used to determine the student's annual award.

[[Enrollment status change during year]]
If a student's enrollment status changes during the year, the school
may have to recalculate the student's Pell payment based on the
student's new enrollment status. Section 5 of this chapter explains
when a school is required to recalculate due to a change in
enrollment status.

For credit-hour programs with terms, the school must determine
whether the student is enrolled full time, three-quarter time, half
time, or less than half time. This allows the school to determine
which Payment or Disbursement Schedule it needs to use. For clock-
hour programs and for credit-hour programs without terms, the
school only needs to determine if the student is enrolled at least half
time or less than half time, so that it can calculate the COA correctly.

[[The chart "Enrollment Status Minimum Requirements" on page 4-15
is currently unavailable for viewing. Please reference your paper document
for additional information.]]

[[School defines full-time enrollment]]
If the school has standard terms (i.e., semesters, trimesters, or
quarters), it may establish its own standards for determining
enrollment status for each of its academic programs, provided its
standards meet the minimum requirements defined in the regulations,
as shown in the chart above. Note that the school's academic standard
may differ from the enrollment standard used by the financial aid
office for SFA purposes. For example, the school may define full
time as six hours during the summer; however, the financial aid
office uses 12 hours as full-time for all terms including the summer
term. The school must apply its standards consistently to all students
enrolled in the same program of study, for all SFA purposes.

[[Enrollment status for nonstandard terms--34 CFR 690.63(d)(1)(ii)]]
If a school's academic calendar contains nonstandard terms, the
school must determine the student's enrollment status for each
nonstandard term. To determine enrollment status for a nonstandard
term, the school must first determine the number of credit hours
required for full-time enrollment status using the following formula:

[[The formula on page 4-16 is currently unavailable for viewing. Please
reference your paper document for additional information.]]

If the resulting number is not a whole number, it is rounded up to the
next whole number. After the school has determined the number of
credit hours required for full-time enrollment, the school can then
determine the less-than-full-time status for the nonstandard term
using the following formula:

[[The formula on page 4-16 is currently unavailable for viewing. Please
reference your paper document for additional information.]]

The resulting fraction is then matched with the appropriate less-than-
full-time status classification. The fraction must equal or exceed the
enrollment status classification. For example, two-thirds would
correspond to a half-time enrollment status. The following examples
illustrate how the enrollment status for a nonstandard term is
determined.

[[Page 4-17, "Nonstandard term examples," is currently unavailable
for viewing on the SFA BBS. Please reference your paper document
or download the pdf files for additional information.]]

If the school has combined two or more terms into a single term for
purposes of the Pell calculation, the student's enrollment status is
based on the combined number of hours the student is enrolled in for
all the component terms of the combined term. Note that if the
student later does not begin attendance in one of the parts of the
combined term, the school must recalculate the student's award (see
Section 5 for more on recalculations).

[["Combined term example" and "Step 1 by formula" on page 4-18
are currently unavailable for viewing. Please reference your paper
document for additional information.]]

CALCULATING THE COST OF ATTENDANCE

The components used to calculate a student's Pell COA are the same
as those used to calculate the COA for the other SFA Programs. (See
Section 3 of Chapter 2 for a list of these components.)

[[Cost for full time for full academic year]]
Although schools must use the same components for calculating a
student's cost for the Federal Pell Grant Program as for the other SFA
Programs, the Pell COA is always based on costs for a FULL-TIME
STUDENT FOR A FULL ACADEMIC YEAR. That is, the amount
of each component must always be a full-time, full academic year
cost.

[[Less than half time]]
For students who are less than half time, COA can include only:
- tuition and fees;
- an allowance for books and supplies;
- transportation (but not miscellaneous expenses); and
- an allowance for dependent care expenses

If the student is enrolled less than half time, the aid administrator can
include in the Pell COA only those cost components allowable for
less-than-half-time enrollment. (See Chapter 2 for more information,
and for other restrictions on COA components.)

The major difference between the COA for Pell and for other SFA
Programs is that under Pell, costs for programs or enrollment periods
longer or shorter than an academic year must be prorated so that they
apply to one full academic year.*1* This is true for both components
of the academic year definition, the number of weeks and the number
of clock/credit hours: If the program or period of enrollment differs
from the defined academic year in either component, the costs must
be prorated to determine the Pell COA.

[[Two proration methods]]
Schools may choose between two proration methods. A school may
either prorate the entire cost using one fraction, or split the COA into
credit or clock hour costs and week costs, and prorate the two types
of costs separately. A school may use whichever method it prefers.

[[Single fraction method]]
To prorate the COA by one fraction, the school must compare two
fractions and multiply the COA by the lesser of the two. There is one
fraction for each component of the academic year definition. One
fraction is calculated by dividing the number of credit or clock hours
in the program's academic year by the hours for which the costs
apply; the other by dividing the number of weeks in the program's
academic year by the weeks for which the costs apply:

Credit/clock hours in program's definition of academic year
----------------------------------------------------------
Credit/clock hours for which costs apply

Weeks of instructional time in program's definition of
academic year
--------------------------------------------------
Weeks of instructional time for which costs apply

The COA is multiplied by the lesser of these two fractions to
determine the student's Pell COA. This Pell COA must be used when
determining the amount of the student's annual award. Note that in
some cases the prorated COA calculated by this method will be the
same as the original, nonprorated COA: If for one of the components
of the academic year the program or period of enrollment for which
costs apply is the same as the academic year, one of the fractions will
be equal to one.

Following are some examples showing how to determine full-time,
full-year costs.

[[Examples 1 and 2 showing how to determine full-time, full-year
costs on page 4-21 are currently unavailable for viewing. Please
reference your paper document for additional information]]

[[Example 3 showing how to determine full-time, full-year costs on
page 4-22 is currently unavailable for viewing. Please reference
your paper document for additional information]]

[[Split proration method]]
As mentioned earlier, the school may split the COA into two parts
and prorate the two parts separately, if it chooses. The school
multiplies costs associated with credit or clock hours (tuition and
fees, books and supplies, loan fees) by the credit or clock hour
fraction discussed previously, and multiplies costs associated with
weeks of instructional time (room and board, miscellaneous
expenses, disability expenses, transportation, dependent care, study
abroad, reasonable costs associated with employment as part of a
cooperative education program) by the week fraction discussed
previously. The student's Pell COA is the sum of the two types of
prorated costs.

[[Actual vs. average cost]]
While schools have the option of determining actual costs for
individual students, most schools prefer to determine the COA by
using an average cost for a group of similar students. (For example, a
school may have different charges for different academic programs
or different charges for in-state vs. out-of-state students.)

[["Step 2 summary by formula" on page 4-23 is currently unavailable
for viewing. Please reference your paper document for additional information]]

DETERMINING THE ANNUAL AWARD

Once the school has figured the student's COA, the financial aid
administrator can use the Payment Schedule or appropriate part-time
Disbursement Schedule*2* to look up the student's annual award. As
mentioned earlier, the annual award is the maximum amount a
student would receive during a full academic year for a given
enrollment status, EFC, and COA. For students enrolled in clock-
hour or nonterm credit-hour programs, the annual award is always
determined from the full-time Payment Schedule, even if the student
is attending less than half time.

PLEASE REMEMBER THAT YOU DO NOT HAVE THE
DISCRETION TO REFUSE TO PAY AN ELIGIBLE PART-TIME
STUDENT.

[["Step 3 summary by formula" on page 4-24 is currently unavailable
for viewing. Please reference your paper document for additional information]]

DETERMINING THE PAYMENT PERIODS

[[NEW]]
The program's academic year must be divided into payment periods.
Pells must be paid in installments over the academic year to help
meet the student's cost in each payment period. The payment period
determines when Pell funds are disbursed and the exact amount to be
disbursed. The cash management regulations published on 11/29/96
have provided a common definition of payment period for all the
programs, which replaces the definition in the Pell regulations. We
will note the changes below; these changes become effective for
payment periods beginning on or after July 1, 1997.

[[Credit-hour term programs]]
For credit-hour term programs, the payment period is the term.
Under the new definition of payment period, the payment period for
a CLOCK-HOUR term program is no longer a term. Instead, clock-hour
term programs are treated exactly like nonterm programs.

[[Nonterm clock-hour programs--34 CFR 668.4(b)]]
For credit-hour nonterm programs and all clock-hour programs, the
school must define, in writing, the payment periods as measured in
clock or credit hours for each program. The regulations require at
least two equal payment periods for programs that are shorter than or
equal to an academic year or at least two equal payment periods in
each full academic year for programs longer than an academic year.

[[Less then AY]]
[[Equal to or longer than AY]]
If the program of study is shorter than an academic year, each
payment period is the period of time in which the student completes
half the credit or clock hours in the program. If the program of study
is equal to or longer than an academic year, each payment period is
the period of time in which the student completes half the credit or
clock hours in the academic year.

Nonterm payment period examples

Less than an academic year

Laurel is enrolled in a 600-clock-hour program. The school
defines the program's academic year as 900 clock hours and 30
weeks of instructional time. Because Laurel's program is shorter
than an academic year, the two payment periods would be based
on the length of her program (in clock hours). Each payment
period is one-half the program, or 300 clock hours.

[[The graphic on page 4-25 is currently unavailable for viewing.
Please reference your paper document for additional information]]

Equal to an academic year

Eric is enrolled in a 900-clock-hour program. The school defines
the program's academic year as 900 clock hours and 30 weeks of
instructional time. Because Eric's program is equal to an academic
year, the two payment periods are based on the length of the
academic year (in clock hours). Each payment period is half an
academic year, or 450 clock hours.

[[The graphic on page 4-25 is currently unavailable for viewing. Please
reference your paper document for additional information.]]

[[NEW]]
[[Transition for summer 1997 crossover payment periods]]
For a program that is longer than an academic year, the treatment of
the hours in the final academic year has changed. Under the old rule,
if the remaining portion of the program in that final year was less
than academic year, each payment period was the period in which
the student completed either half the academic year or all the
remaining hours in the program, whichever was less. Under the new
definition, if the number of hours remaining in the final year is less
than half an academic year, the final payment period is still the
period of time in which the student completes the remaining hours.
Otherwise, each payment period in the final year is the period in
which the student completes half the remaining hours in the
PROGRAM. However, for the 1997-98 award year ONLY, if the
remaining portion of the program begins before July 1, 1997 and
crossed two award years, the school may use the old definition of
payment period for that remaining portion. Note that this applies to
summer 1997 crossover payment periods ONLY. This delay allows
schools additional time to make any necessary adjustments to their
academic calendars to accommodate the new payment period
definition. The examples on the next page show both the new rule
and the use of the old rule for summer 1997.

[["Nonterm payment period example'' on page 4-26 is currently
unavailable for viewing. Please reference your
paper document for additional information]]

[[More frequent payment periods--34 CFR 668.4(b)(4)]]
Regulations also permit a school to establish more frequent payment
periods for its programs of study. For example, a school may choose
to use monthly payment periods. The payment periods must be equal
in number of credit or clock hours, except that a final payment
period for a program may be shorter than the other payment periods.

More frequent payment periods

Because many of the students enroll part time, Sarven Technical
Institute decides to have four payment periods for the 650 clock
hour program Miranda is enrolled in. Sarven can determine the
number of clock hours in the payment periods by dividing the
number of hours in the program by the number of payment
periods:

650 / 4 = 162.5

The first three payment periods will be the period in which the
student completes 163 clock hours. The last payment period will
have only 161 clock hours (the hours remaining in the program
after the first three payment periods). 163 hrs

[[The graphic on page 4-27 is currently unavailable for viewing.
Please reference your paper document for additional information]]

Because Miranda is enrolled for only 10 clock hours a week, her
second payment period will not begin until after she is in the 17th
week (it will take her that long to complete 163 hours).

For clock-hour programs and nonterm credit-hour programs, the
payment period ends when the student has completed all the credit or
clock hours in the payment period. Because the length of a payment
period (measured in weeks of instructional time) is based on what a
full-time student is expected to complete, part-time students will take
longer than full-time students to complete each payment period.
However, as we will discuss in "Calculating the Payment for a
Payment Period," the number of weeks of instructional time that is
used in the formula to calculate the payment for the payment period
will remain the same.

[[34 CFR 668.4(b)(3)]]
For some nonterm credit-hour programs, the school does not award
credits for part of the year (or program). For example, the school
may award the student credits only after the student has completed
the entire program. The school must still determine the payment
periods as usual, but may adjust the beginning of the second payment
period to account for the student being halfway or further through
the year or program without having earned half the credits. In such
cases, the second payment period is considered to begin at the later
of the calendar midpoint between the first and last day of class or the
point at which the school considers that the student has completed
half of the academic coursework for the year or program.

Sarven Technical Institute does not award credit to a student in the
nonterm 24 quarter hour program Allen is enrolled in until the
student completes the entire program. Because the program is
shorter than an academic year, it must have at least two equal
payment periods. Each payment period will be the period of time
in which a student completes 12 quarter hours.

Because Allen will not be awarded 12 quarter hours before he
finishes the program, Sarven adjusts the beginning of the second
payment period. The program is 20 calendar weeks in length; the
calendar midpoint between the first and last day of enrollment is at
the beginning of the 11th calendar week. Sarven considers that
Allen has completed half the academic coursework (although he
has not been awarded any credit hours) by the end of the 8th
calendar week.

[[The graphic on page 4-28 is currently unavailable for viewing. Please
reference your paper document for additional information]]

Sarven may pay Allen for the second payment period at the
beginning of the 11th calendar week, because this is the later of
the two points.

[[Excused absences--34 CFR 668.164(b)(3)]]
[[NEW]]
Note that a school with a clock-hour program may take into
consideration "excused absences" in determining whether a student
has completed the hours in a payment period. The school must have
a written policy permitting excused absences, and the absences must
actually be excused--that is, the student will not be required to make
up the absences to receive the degree or certificate for the program.
The cash management regulations now provide that the school
cannot allow the excused absences to exceed 10% of the clock hours
in the payment period (or less as required by accrediting agency or
state agency policies). For example, if a school's written policy (in
accordance with its accrediting agency guidelines) allows a student
to miss up to 50 hours of a program, the school may still pay a
student who had missed 20 of the first 450 hours at the same time it
would pay a student who did not miss any hours. Note that although
the accrediting agency guidelines in this case allow the student to
miss up to 50 hours of the entire program, the school could not
excuse more than 45 hours (10% of the hours) of the payment
period.

[["Step 4 summary by formula" on page 4-29 is currently unavailable
for viewing. Please reference your paper document for additional information]]

CALCULATING THE PAYMENT FOR A PAYMENT PERIOD

Once the school has determined the payment period, it can determine
how much of the annual award the student will receive for that
payment period. A student may receive a Pell payment only for those
terms, or payment periods, in which the student is enrolled. For some
students, the total disbursements for all payment periods within the
award year will equal the amount of the Scheduled Award. However,
students who attend for less than an academic year (in either
clock/credit hours or weeks of instructional time) will not receive a
full Scheduled Award. This may occur if the student enrolls for only
part of the year, attends part time, or if the program is less than an
academic year in length. These enrollment variations are taken into
account in the calculation of the student's payment for the payment
period. The four calculation formulas discussed in this section
account for these variations differently; therefore, we will describe
the calculation for each formula separately (see page 4-11 for more
information on which formula to use).

[[Formula 1]]
For a program using Formula 1, a student will attend less than an
academic year only if he or she enrolls part time or does not enroll in
all terms in the academic year. The adjustment for part-time
enrollment is made in determining the annual award (by using the
appropriate part-time Disbursement Schedules). The adjustment for a
student not enrolling in all terms is made by dividing the annual
award evenly between the terms. If the student does not enroll in a
term, he or she will not receive that part of the award. Therefore, to
determine the payment for a payment period, divide the annual
award by the number of payment periods in the academic year (two
for semesters or trimesters, three for quarters). However, if the
school has a summer term, it may wish to use an alternate calculation
that spreads the award over the summer term as well (see "Summer
Terms" later in this section for more information).

Helen enrolls full time in Hart University in a degree program
offered in semesters. Hart University can use Formula 1 to
calculate Pells for students in this program. Helen enrolls in both
semesters in the 1997-98 award year, and her EFC is 752. The Pell
COA is $8,170.

Based on a COA of $8,170 and an EFC of 752, the full-time
Payment Schedule shows that Helen is eligible for an annual
award of $1,950.

To calculate Helen's payment for the semester, Hart divides the
annual award by the number of terms:

$1,950 / 2 = $975

Therefore, Helen's payment for each semester is $975; she will
receive the full annual award of $1,950 if she actually attends full-
time both semesters.

[[Formula 2]]
[[34 CFR 690.63(c)(3)]]
For a program using Formula 2, a student will attend less than an
academic year in credit hours only if he or she enrolls part time or
does not enroll in all terms (fall through spring) in the academic year.
As for Formula 1, the adjustment for part-time enrollment is made in
determining the annual award (by looking up the award on the
appropriate schedule). Because the fall through spring terms provide
fewer than 30 weeks of instructional time, the school must always
adjust for less than an academic year in weeks by prorating the
annual award:


Weeks of instructional time in fall
through spring terms
Annual award x --------------------------------------
Weeks of instructional time in
program's definition of academic year

Then, to adjust for students not attending all terms, the award is
divided evenly between terms. To determine the payment for one
payment period, divide the PRORATED annual award by the
number of terms in the year (two for semesters or trimesters, three
for quarters). If the school has a summer term, it may use the
alternate calculation to distribute the award over all terms (see
"Summer Terms" later in this section).

Emma enrolls full time in Woodhouse College, which has two
semesters of 14 weeks each. Woodhouse College defines the
academic year for Emma's program as 24 semester hours and 30
weeks of instructional time, and uses Formula 2 to calculate Pells
for students in this program. Emma's EFC is 545, and the Pell
COA for the program is $6,505. The full-time Payment Schedule
shows that Emma is eligible for an annual award of $2,150.

Because the two terms provide less than 30 weeks of instructional
time, the annual award must be prorated:

[[Computation on page 4-31 is currently unavailable for viewing.
Please reference your paper document for additional information]]

This prorated amount is then divided by the number of terms:

$2,006.67 ¸ 2 = $1,003.34

Therefore, Emma's payment for the first semester is $1,003
(rounded down from $1,003.34) and her payment for the second
semester is $1,004 (rounded up because the first payment is
rounded down). Emma will receive $2,007 for her attendance in
both semesters. Note that this is less than her Scheduled Award;
she may be able to receive the remaining $143 if she enrolls in a
summer term.

[[Formula 3]]
[[34 CFR 690.63(d)3, 4]]
Under Formula 3, the school also adjusts for less than an academic
year by using enrollment status in determining the annual award and
by distributing the award over terms. Because the program may use
uneven nonstandard terms, the award cannot simply be divided
evenly among the terms. Instead, the school must multiply the annual
award by a fraction representing the proportion of an academic year
the payment period contains. This procedure adjusts for the period of
enrollment that is less than an academic year either because the
student misses a term or because the terms provide less than an
academic year of instruction. To calculate a student's payment for a
payment period, the school uses the following formula:


Weeks of instructional time in the term
Annual award x --------------------------------------
Weeks of instructional time in
program's definition of academic year

[[34 CFR 690.63(f)]]
If the resulting amount is more than 50% of the annual award, the
school must make the payment in at least two disbursements. A
single disbursement may never be more than 50% of the annual
award.

[[The calculation examples on page 4-32 and 4-33 are currently
unavailable for viewing. Please reference your
paper document for additional information.]]

[[Formula 4]]
[[34 CFR 690.63(e)2]]
Unlike under the preceding three formulas, no adjustment for
enrollment status is made in determining the annual award under
Formula 4. Instead, a comparable proration of the award based on
hours enrolled must be performed. The calculation for the payment
period adjusts the annual award both if the student will be enrolled in
fewer credit/clock hours than in a full academic year (an adjustment
mainly handled by enrollment status in the other formulas) and if a
full-time student would be attending fewer weeks than a full
academic year. To adjust for fewer weeks, the school must multiply
the annual award by the lesser of:

Weeks of instructional time for a full-time student to
complete hours in the academic year
----------------------------------------------------
Weeks of instructional time in program's
definition of academic year

OR

Weeks of instructional time for a full-time student to
complete hours in the program
---------------------------------------------------
Weeks of instructional time in program's definition
of academic year

OR

ONE (1)

Note that the result of this multiplication will never be greater than
the original annual award. Because the annual award has not been
adjusted for enrollment status, the fractions use the weeks of
instructional time for a FULL-TIME STUDENT to complete the
hours in the program or academic year. The school must determine
the weeks of instructional time it takes a full-time student to
complete the hours based on the time required for the majority of its
full-time students to complete the program or academic year, not
student by student.

[[34 CFR 690.63(e)3]]
Then, to adjust for fewer clock/credit hours, the school must multiply
this adjusted annual award by the following fraction:

Credit/clock hours in a payment period
------------------------------------------------------
Credit/clock hours in program's definiton of academic year

[[34 CFR 690.63(f)]]
The resulting amount is the payment for a payment period. However,
if this amount is greater than 50% of the annual award, the school
must make the payment in at least two disbursements. A single
disbursement may never be more than 50% of the annual award.

[[The calculation examples on page 4-35 are currently unavailable
for viewing. Please reference your paper document
for additional information.]]

[["Step 5 summary by formula" on page 4-36 is currently unavailable
for viewing. Please reference your paper document
for additional information.]]


*1* Note that in many cases prorating the COA will not affect the
amount of Pell the student receives. However, you must enter
accurate amounts when reporting disbursements (see Section 7).

*2* The Payment and Disbursement Schedules are mailed to all
participating schools before the award year begins. Many schools
and servicers have programmed the schedules, using the
Department's specifications, for use on microcomputers or
mainframes. For 1997-98, schools with very low tuition charges
must follow the additional instructions accompanying the schedules
to determine the student's annual award (see "Dear Colleague" Letter
POL-97-1). Note that there were two incorrect amounts in the
Alternate Disbursement Schedule for half-time students originally
provided in the "Dear Colleague" Letter. A corrected version of the
schedule is included as part of Appendix E.

Section 2: Calculating the Federal Pell Grant
pages 4-37 to 4-44


CHECKING REMAINING ELIGIBILITY: CROSSOVER
PAYMENT PERIODS

Payment periods do not always fall neatly into one award year or
another. When a payment period falls into two award years, it is
referred to as a "crossover payment period."

At a school with a traditional term calendar, the summer term is
usually a crossover payment period.

[[The graphic "Semester Example" on page 4-37 are currently
unavailable for viewing. Please reference your paper document
for additional information.]]

The basic calculation for a crossover payment period is the same as
that for any other payment period. However, there are additional
provisions for some summer terms. (See "Summer Terms" in this
section.)

[[Payment from either award year]]
The school may make a payment for a crossover payment period out
of either award year, provided the student has a valid output
document for the award year selected, except that if more than six
months of the payment period occurs in a given award year, the Pell
payment must be made from that award year.

The decision about which award year to use is usually based on the
student's remaining eligibility in the earlier award year. For instance,
if a student had already been paid for two semesters (each at least 15
weeks) as a full-time student for a full academic year in the 1997-98
award year, the student would have been paid a full Scheduled
Award for that year. However, if the school receives a valid output
document for the 1998-99 award year, the student could be paid for
the crossover period from that year's funds. Of course, a student may
still be eligible for a summer payment from the earlier award year if
the student has not attended for a full academic year. For example, a
student who enrolls at midyear, in the spring session, might still have
eligibility remaining for the summer term. As another example, a
student could receive a Pell payment for the summer term, even after
receiving payments for the other terms in the award year, if the
student attended PART TIME in those other terms, or if those terms
provided less than 30 weeks of instructional time.

[[Costs for crossover payment period]]
Costs for a crossover payment period are figured in the same way as
for any other payment period; that is, the costs are based on a full
academic year. For instance, if the school has fall and spring
semesters that comprise an academic year, the financial aid
administrator must not add the costs for the summer term to the costs
for the fall and spring semesters. The award for the summer term is
still based on the costs for one academic year. However, if the
academic year definition includes the summer term, then the costs
for the summer term MUST be included in the cost for a full
academic year.

If the student was previously enrolled in the award year, the school
may be able to use the same COA for the summer term that it used
for the immediately preceding term the student attended. However,
this is not possible if the school is required to recalculate the COA.
(See Section 5 of this chapter for information on when recalculations
are required.) If it is necessary to base the student's COA on the
summer term, the financial aid administrator must prorate the
summer costs to establish the cost for an academic year. (See
"Calculating the Cost of Attendance" in this section for information
on prorating costs.)

If the summer session is the first term in the award year for that
student (for example, the school is paying a student for the summer
1997 term from the 1997-98 award year), the school must establish
the student's full-year cost based on the costs for the SUMMER term.
If the student enrolls in another term in that award year, the school
may have to recalculate the student's costs for the later term (see
Section 5.)

SUMMER TERMS

If a school offers a summer term in addition to fall through spring
terms, the school calculates the student's payment for the summer
term by using the same formula used to calculate the payment for
each term within the school's fall, winter, or spring terms. For a
program for which the school could calculate awards using Formula
1 or 2, the school may instead perform an alternate calculation that
distributes the annual award over all the terms for all students
enrolled in the program.

[[Full-time status definition]]
Regardless of the method the school chooses to calculate the
student's summer payment, the aid administrator must apply the
school's definition of full-time status consistently to all SFA
Programs. In addition, in order to calculate a student's Pell under
Formula 1 or 2 or under the alternate calculation, the aid
administrator must define full-time enrollment during the summer as
at least 12 credit hours.

[[Alternate calculation]]
To perform the alternate calculation, the school divides the annual
award by the number of terms (including the summer term) in the
award year. If the school chooses this alternate calculation, the
school must use the alternate calculation for ALL students enrolled
in the same program of study, increase the number of weeks of
instructional time in the academic year defined for the student's
program to include the number of weeks in the summer term, and
include the costs for the additional term in the Pell COA. The school
may also include the number of credit hours for the additional term
in the academic year defined for the student's program.

Alternate calculation example

Kevin enrolls as a half-time student in a two year associate degree
program at Ivers Community College. The academic calendar for
this program uses quarters; there are three quarters in the fall
through spring terms, each providing 9 weeks of instructional
time. The program also has a summer quarter which provides 9
weeks of instructional time. Ivers can use Formula 2 to calculate
Pells for students in the program, and decides to use the alternate
calculation to distribute the award over all four terms. The school
defines the academic year for Kevin's program as 48 quarter hours
and 36 weeks of instructional time (both the weeks and the credit
hours for the summer term are included in the academic year).
Kevin's EFC is 300, and the Pell COA (which includes costs for
the summer quarter) is $5,200.

Based on a COA of $5,200 and an EFC of 300, the half-time
Disbursement Schedule shows that Kevin is eligible for an annual
award of $1,225. Ivers uses the alternate calculation to determine
Kevin's payment for a payment period. It divides the annual award
by the number of terms in the award year:

$1,225 / 4 = 306.25

Kevin will receive $306 (rounded down from $306.25) in the fall,
winter, and spring quarters; he will receive $307 (rounded up
because other payments are rounded down) in the summer quarter.

If the school does not choose to use the alternate calculation and
calculates the payment for the summer term using Formula 1 or 2,
the school must ensure that the amount of Pell funds the student
receives for the award year does not exceed the Scheduled Award.
(See "Crossover Payment Periods" in this section.)

Suppose for the preceding example, Ivers did not use the alternate
calculation, and calculated payments using Formula 2. Because
Ivers would no longer be required to include the summer term in
the academic year definition, it could define the academic year for
the program as 30 weeks of instructional time and 36 quarter
hours. Ivers would also have to adjust the COA (to remove
summer costs), although in this case it would not affect Kevin's
annual award. Using the same annual award as in the previous
example, the school would calculate Kevin's payment as follows:

[[The calculation on page 4-40 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

Ivers would then divide this prorated annual award by 3 (because
the program uses quarters) to determine Kevin's payment for the
payment period:

$1,102.50 / 3 = $367.50

Kevin would receive $368 for each of the fall and spring quarters
(rounded up from $367.50), and $367 for the winter quarter. He
would receive an additional $367 payment for the summer quarter.
Under this calculation, Kevin will receive a total of $1,470 for the
award year. His Scheduled Award is $2,450, so he will not receive
more than a Scheduled Award.

[[Summer minisessions]]
If a term-based school offers a series of minisessions that overlap
two award years (by "crossing over" the June 30 end date for one
award year), these minisessions may be combined and treated as one
term. However, schools are not required to combine these
minisessions. The weeks of instructional time in the combined term
are the weeks between the beginning of the first minisession and the
date the last minisession will end. The student's enrollment status for
the entire payment period must be calculated based on either

- the total number of credits the student is taking for all sessions, if
that number is known when the award is calculated, or

- a projected number of credits based on the credits the student is
taking for the first session if the number of credits to be taken in
subsequent sessions is unknown when the award is calculated.

If the school combines minisessions into a single term, a student may
not be paid more than the amount for one payment period for
completing any combination of the minisessions.

Note that recalculation is required if the student does not ultimately
attend the projected classes in a subsequent minisession. (See
"Change in Enrollment Status" in Section 5 of this chapter.)

If the school does not combine minisessions into a single payment
period, it must treat each minisession as a separate nonstandard term
and calculate the payment for each using Formula 3.

Minisession example

Bruce enrolls part time at Hart University. In addition to fall and
spring semesters, Hart University offers three summer
minisessions. Each minisession provides 5 weeks of instructional
time. Hart chooses to combine the sessions into a single payment
period providing 15 weeks of instructional time. Full-time
enrollment in this period is defined as 12 semester hours. Hart can
use Formula 1 to calculate payments for this summer session.

Bruce enrolls for 3 semester hours in each of the minisessions, so
he is enrolled three-quarter time (9 hours total in the combined
term). His EFC is 772 and the Pell COA is $8,170. Based on a
COA of $8,170 and an EFC of 772, the three-quarter-time
Disbursement Schedule shows that Bruce is eligible for an annual
award of $1,463. To calculate Bruce's payment, the school divides
the annual award by the number of terms in the academic year:

$1,463 ¸ 2 = $731.50

Bruce may receive $732 for the combined summer session if it is
the first term of the award year. However, suppose Bruce had also
enrolled three-quarter time in the preceding fall and spring
semesters. He would have received a total of $1,463 for these two
terms. If this amount is subtracted from his Scheduled Award
($1,950), only $487 remains. Therefore, if Bruce had enrolled in
both semesters and was being paid from the same award year for
the summer, he would only receive $487 for the combined
summer session.

If Hart University did not combine the three minisessions, it would
have to calculate payments for the program using Formula 3. Hart
would have to determine Bruce's enrollment status by multiplying
full-time enrollment for the academic year (24 semester hours) by
the number of weeks of instructional time in the term (5) over the
number of weeks in the academic year (30). For the 5 week terms,
a full-time student must enroll in 4 semester hours to be full time;
therefore, Bruce is still enrolled three-quarter time. The COA
would not have to be adjusted, and his annual award would remain
the same. Hart would determine his payment using the following
calculation:

[[The calculation on page 4-41 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

Bruce would receive $244 for the first two minisessions (rounded
up from $243.83) and $243 for the third (rounded down because
the first two were rounded up), for a total of $731 for the summer.
Again, these payments may need to be reduced if Bruce had
previously received payments for the fall and spring semester in
this award year.

CHECKING REMAINING ELIGIBILITY: TRANSFER
STUDENTS

[[Output document and financial aid history needed]]
The school must be careful not to exceed the Scheduled Award when
paying a student who has previously received a Pell for the award
year at another school. To pay such a student, the school must obtain
a SAR or ISIR and financial aid history information.

[[Application information]]
There are three ways for a school to obtain the student's application
information and official EFC if that school was not listed on the
FAFSA:

1. The school can have the student request a duplicate of his or her
original SAR and submit it.

2. If the school participates in EDE, it can have the student provide
the Personal Identification Number (PIN) that is printed on the
upper right corner of the SAR, so that the school can obtain the
student's data electronically.

3. The school can have the student correct his or her SAR to add the
school's name to the list of schools in items 92 through 103.

[[Financial aid history]]
The school may obtain a financial aid history by requesting that the
other eligible school(s) that the student attended send a financial aid
transcript. Note that schools may also receive transcript information
through the NSLDS. (See Chapter 2 for more on transcript
requirements and NSLDS.) However, schools should be aware that
there are limits on the use of NSLDS for midyear transfers, as
discussed below.

[[Midyear transfer--"Dear Colleague" Letter GEN-96-13]]
[[NEW]]
To calculate awards for students who transfer during the award year,
the school must have up-to-date information on the student's
scheduled award and the amount disbursed. That information is not
provided in the NSLDS section of the output document. If the school
wishes to use NSLDS for transcript information for such students, it
must check NSLDS at least 60 days after the end of the student's
enrollment at the previous school. A school may make an initial
disbursement to such students before receiving the final NSLDS data
as it would to students for which it had requested but not received a
financial aid transcript. Alternatively, the school may request up-to-
date transcript data from the previous school. The school may
request only information on the current year and use NSLDS for the
remaining financial aid history. (See Chapter 2, Section 2 for more
on NSLDS.)

[[Calculating the payment]]
The Pell payment for a transfer student is calculated in the same way
as for any new student. That is, the school must divide the annual
award (prorated if necessary) into payments for each payment
period. However, before paying a transfer student, the school must
also make sure the student does not receive more than 100% of his or
her Scheduled Award during the award year. Thus the school must
determine what percentage of the Scheduled Award at the previous
school the student actually received. Because the school is
determining the relationship between the amount the student received
and the Scheduled Award used to determine that amount, the school
must use the Scheduled Award reported by the previous school in
determining this percentage, and cannot correct it on the basis of its
own records.

[[Figuring percentage of remaining eligibility--34 CFR 690.65(d)]]
The financial aid history provides the necessary information. First,
find the percentage of the Pell received at the previous school by
dividing the amount the student received by the student's Scheduled
Award at that school. Then subtract this percentage from 100%. The
result is the maximum percentage of the Scheduled Award that the
student may receive at the new school.

Transfer example

A student attends fall and winter terms at a school using
nonstandard terms. The student then transfers to a school using
semesters for the spring semester. The financial aid transcript from
the first school shows the student received $1,003 in Federal Pell
Grant payments and had a $1,700 Scheduled Award. The student
is eligible for a $2,100 Scheduled Award at the new school. What
is the maximum the student can be paid for the remainder of the
award year at the new school?

$1,003 / $1,700 = 59% of Scheduled Award used at first school

The student is eligible for 41% of the Scheduled Award at the new
school.

41% x $2,100 = $861

A student with a $2,100 Scheduled Award would ordinarily
receive a $1,050 payment for one semester (if enrolled full-time).
However, the transfer student in this example may not be paid
more than $861, because the student has received 59% of the
Scheduled Award at the first school.

The reason for using percentages is that a transfer student may have
different Scheduled Awards because the costs of attendance at the
two schools may be different. The percentages are used to compare
the portions of a student's total eligibility that have been used at both
schools. (If the student's Scheduled Award is the same at both
schools, the financial aid administrator can find the amount of the
student's remaining eligibility simply by subtracting the amount
received at the first school from the Scheduled Award.)

Note that a transfer student receives the same payments as any other
student until the limit (100% of a Scheduled Award) is reached. For
example, a transfer student enrolls for two terms in the award year at
a school and would ordinarily receive a $500 payment for each term.
However, the student's remaining eligibility, based on payments at
the other school, is only $600. Rather than "rationing" this amount
by splitting it into two $300 payments for the two terms, the school
must pay the student $500 for the first term and the remainder ($100)
for the second term. Thus, the student will have received a full
payment for the first term, even if he or she does not return for the
second term.

TWO MATHEMATICAL NOTES

[[Rounding]]
When making disbursements, round to the nearest dollar: Round up
if the decimal is .50 or higher; round down if it is less than .50. For
instance, if a calculation resulted in a payment of $516.66, round up
to $517. If the calculation result was $516.33, round down to $516.
The payment system will not allow payments including cents.

For a student who is expected to be enrolled for more than one
payment period in the award year, the school must alternate rounding
up and rounding down to ensure that the student receives the correct
amount for the year. For example, if a student had a Scheduled
Award of $1,025 to be paid in two payment periods, the first
payment would be $513 (rounded up from $512.50), and the second
payment would be $512 (rounded down to ensure that the student is
not overpaid for the year).

The same principle applies when there are three or more payment
periods in the award year. For instance, if the student has a
Scheduled Award of $1,100 and enrolls at a school using quarter
terms, the payment for each term would come to $366.66. The first
two payments would be rounded up to $367, and the last payment
would be rounded down to $366 to reach the total of $1,100.

[[Fractions]]
When using fractions, be careful to multiply first, and then divide to
avoid making an overpayment. For example, to calculate the
payment in a program that has three payment periods of 300 hours
each, you should use the method in this example:

[[The fractions example on page 4-44 is currently unavailable for
viewing. Please reference your paper document for additional information.]]

Last Modified: 03/01/1998