A federal Pell grant is intended to provide low-income students with help to pay for their undergraduate college related expenses (though some post baccalaureate teacher certifications programs are eligible too).
For the academic year of 2012-'13, you can receive a federal Pell grant for up to $5,550. Unlike a loan, the federal Pell grant does not have to be repaid.
Eligibility for the program and the amount received is based primarily on a student’s financial need and the cost of attending college. You must apply for a Pell grant each year, along with your other financial aid, by completing and submitting your FAFSA form.
The grants are paid to the school and each school determines how the funds are distributed. Often, the school will use the funds to pay for tuition, fees and other expenses.
Then, if there is any money left over, the school may pay the balance directly to the student. Or, the school can pay all of the funds directly to the student in the form of a check or direct deposit to an account. You should check with your financial aid department to find out your school’s specific policy.
If the school pays the student directly, then it is the student’s money at that point. The student can use the funds to pay for their other expenses as needed.