While high-earning parents often get a raw deal when it comes to their kids qualifying for financial aid for college, individuals who have control over their income and the ability to plan early have access to the ultimate workaround. In fact, it’s totally possible to have millions of dollars in certain non-retirement assets and see your child qualify for the maximum Pell Grant amount ($7,395) plus generous institutional aid and federal student loans to cover remaining balances.
You may be wondering how high net worth individuals can set up their finances so they score maximum financial aid for their kids? Financial advisor Jack Wang of the Smart College Buyer podcast says that, for the most part, becoming a so-called “Pell-ionare” requires families to have control over their taxable income in the years it matters most – starting well in advance of the college application process.
How To Become A “Pell-ionare”
Becoming a Pell-ionaire by having your kids qualify for maximum need-based aid for college isn’t necessarily difficult, but it does require early planning and the ability to control one’s taxable income in years that count for the Free Application for Federal Student Aid (FAFSA). Wang says this is because Pell grant awards are based on adjusted gross income (AGI), and because assets no longer play a role in eligibility for either maximum Pell ($7395) or minimum Pell ($740) amounts.
Generally speaking, qualifying for maximum federal aid requires getting an AGI below 175% of the Federal Poverty Level (FPL) for a dependent student with married parents. For a family of four, 175% of the FPL works out to around $56,262 in 2025.
How can you become a Pell-ionaire? Wang says any strategies that reduce AGI to Pell-eligible range would work here.
“Strategies such as generating losses through real estate investing, business ownership, or investing in alternatives such as movie production or oil and gas drilling would work,” he says.
Parents who have retired early may have an edge when it comes to becoming a Pell-ionaire as well. For example, a married couple who is living off a combination of taxable brokerage withdrawals and cash in savings may be able to keep their taxable income low enough in FAFSA years by strategically accessing their money.
The part about “in FAFSA years” also matters a lot here since Wang says any strategies you use to reduce AGI would have to be implemented early enough to hit the tax return that the FAFSA references. For example, the current FAFSA for the 2025-26 academic year uses your 2023 tax return.
Next year’s FAFSA for 2026-27 will use your 2024 tax return.
Does becoming a Pell-ionaire work? It absolutely does, and you can read over the stories of real people using this strategy on message boards like Reddit on threads like this one or this one. Pell-ionaires on Reddit tend to be early retirement enthusiasts who keep their AGI low by living off savings and brokerage account withdrawals during FAFSA years, but there’s lots of juicy info to dive into if you have the time.
More complex strategies can work as well. Brian Safdari CPE, a Certified College Planning Specialist with the National Institute of Certified College Planners (NICCP), says that he had a client that had $600,000 that got sheltered with net operating losses of $150,000 that offset their wages of $125,000 to generate a negative AGI that qualified for the maximum Pell grant since they had a $0 student aid index (SAI).
“Families that have control over their adjusted gross income and know the non-assessed assets on the FAFSA forms will have the competitive edge on strategizing to maximize Pell grants, state grants, and other need based grants,” says Safdari.
Pell-ionaire Issues You’ll Want To Avoid
While having an AGI low enough to qualify for Pell grants and other financial aid for college isn’t illegal, there are some pitfalls you want to avoid if you’re planning for this strategy.
Safdari says one of the biggest “gotchas” is parents not realizing they have to plan for this strategy years ahead.
“SAI strategies must be done two years prior to going to college since the FAFSA uses the PPY (prior-prior year) system,” he says. “Most parents wait until the child is applying to colleges and then get introduced to the FAFSA.”
Wang also points out that strategies that generate significant losses may be disallowed by the IRS as abusive tax schemes. If deemed so by the IRS, the taxpayer could face significant penalties or even criminal sanctions.
And even if deemed legal, there are limitations in the tax law related to active vs. passive income and losses. If not done properly, Wang says some of these strategies may be categorized as passive losses, and the taxpayer may be limited in how much they can claim on their return.
“Thus, a family may not reduce their AGI as much as they planned on to get into Pell eligibility range,” he says.
Finally, don’t forget that you’ll want to consider this strategy as part of a comprehensive financial plan that doesn’t neglect other aspects of your finances. If getting more financial aid for college costs you money elsewhere or holds you back from reaching other financial goals, it’s possible the juice may not be worth the squeeze.
“Sometimes the costs of implementing a financial strategy exceeds the benefit of obtaining additional merit or need based aid,” says Danilo Umali of Game Theory College Planners. “Families and planners should never lose sight of this.”
The Bottom Line
There are some ethical considerations to keep in mind if you’re hoping to maximize federal and institutional aid for college and you have millions of dollars in the bank. Then again, none of us make the rules or set the prices for college tuition and fees, plus room and board.
If you want to be a Pell-ionaire, the best thing you can do is start planning early and understand what AGI is and how (and if) you can control it. It’s possible you can get your taxable income into the range where your dependents can qualify for considerable financial aid for college during FAFSA years, but this strategy won’t work for everyone.
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