The College Cost Reduction Act of 2007 will increase by nearly 600,000 the number of low- and moderate-income students who are eligible to receive federal Pell Grants.

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Qualifying for Pell Grants

Qualifying for a Pell Grant can require lots of paperwork, but it pays off if you find you're eligible for the aid. After the recent Congressional increases in the maximum Pell Grant award, eligible students can receive up to $4,731 for the 2008-2009 year. The criteria for eligibility include your financial information (or that of your parents if you're still considered a dependent), the number of classes you'll be taking in a given quarter or semester and the costs for the school you'll be attending.

To apply for the Pell Grant, the first step is to fill out the FAFSA (Free Application for Federal Student Aid) application. The application can be completed online or hard copy, but it's a good idea to complete the FAFSA on the Web Worksheet first, to ensure that you have all the information you'll need on hand. The documents you'll need include your Social Security number, driver's license number, current tax returns and bank statements, and proof of citizenship. You can find a more comprehensive list of the necessary documents on the FAFSA website.

Your financial status helps determine your EFC, or Expected Family Contribution. The EFC shows your family's ability to pay for college. It's based on your family income and size, and on the number of family members attending college. The formula for determining eligibility is updated each year, but it generally provides aid to families who earn less than the set amount for that year.

Of course, there's some controversy over Pell Grants. Many people think the recent increases in the maximum yearly award are too little and too late. Since the cost of college is rising so sharply, the Pell Grant pays a much smaller percentage of the total cost of a year's college than it did when the Pell program began. President Bush's administration has plans to increase the yearly maximum even more, to over $5,000 over the next few years. He has a great deal of support for increasing the grants, but it's not clear where the money will come from. Those who worry that the money will be taken from other federal grant programs say it's wrong to take from those deserving programs to fund the Pell Grant. Either way, it's pretty obvious that the situation will be greatly affected by the election of a new president this fall.

To find out more about how the U.S. government funds its many grant programs, keep reading.