The Pell Grant is a federal program that provides money for undergraduate students with financial need. Fund disbursement is calculated according to parent and student finances and expected to be used for tuition and fees, books and school transportation costs. Depending on the particular school, your Pell funds will either be credited to your account or a check cut by the school to you. Part of the calculation of your Pell amount is dependent on how many classes you're taking. Dropping one can make you liable for a portion of the money already disbursed.
Dropping a Class
The first situation a student normally runs into is when he decides his class schedule is too heavy and he drops a class at some point during the semester. Since the amount of Pell Grant financial aid you receive is based on the number of hours you take and your enrollment status, your grant will be reduced by a proportionate amount if you drop a class. If you drop so many classes that it changes your status, such as from full-time to half-time, expect your Pell to be reduced.
The most drastic form of dropping classes is when a student dis-enrolls from school completely. Depending on how far along in the semester she is - 60 percent being the mark used by at least one school, Baldwin Wallace College - financial aid may be adjusted downward, leaving the student with less money to pay educational expenses than originally anticipated. In the Baldwin Wallace example, once the semester has progressed more than 60 percent of the way, no adjustments will be made.
Any time that dropping a class reduces the amount of Pell money that you are eligible for, and it has already been paid out to you, it is called an overpayment, and the federal government takes overpayments very seriously. If a Pell payment that was already credited to the school for your tuition bill is suddenly reduced, you will find likely find yourself owing the school that amount of money.
In the event of an overpayment, the consequences can be severe for a student's future plans for financial aid. He will not be allowed to receive any other form of federal financial aid until the Pell debit is paid back. That means both subsidized and unsubsidized federal loans as well as additional Pell grants. The government will also be glad to intercept any future tax refunds you may have coming to satisfy the debt.