Shannon M. Mahan
Specialist in Education Policy
The Federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. The program is estimated to have provided over $32 billion to approximately 8.3 million undergraduate students in fiscal year (FY) 2010. For FY2010, the total maximum Pell Grant was funded at $5,550. The program is funded primarily through annual appropriations, although mandatory appropriations play a smaller, yet increasing, role in the program.
Pell Grants are need-based aid that is intended to be the foundation for all federal student aid awarded to undergraduates. There is no absolute income threshold that determines who is eligible or ineligible for Pell Grants. Nevertheless, Pell Grant recipients are primarily low-income. In FY2008, an estimated 62% of Pell Grant recipients considered to be dependent upon their parents had a total family income at or below $30,000. Of Pell Grant recipients considered to be independent of their parents, an estimated 83% had a total family income at or below $30,000.
The Pell Grant program has garnered considerable attention over the past several years in Congress. Most recently, the SAFRA Act, passed as part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), established indefinite mandatory appropriations beginning in FY2010 to provide for increases to the maximum award amount funded with annual discretionary appropriations. Prior to the SAFRA Act, the program also received substantial discretionary and mandatory supplemental funding through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The statutory authority for the Pell Grant program was most recently reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315).
The Pell Grant program recently experienced substantial increases in program costs—largely due to a weakened economy, increases in the number of students enrolling in college and applying for Pell Grant aid, and legislative changes that have led to increased benefits for more students. The combination of these factors has led to relatively large funding shortfalls in the program over recent years. Many of the issues concerning the Pell Grant program that confront Congress include potential challenges associated with funding the program—both in the short term and the long term.
In the short term, additional discretionary funding for the Pell Grant program may be required in order to ensure current award levels are maintained, leading to the program comprising an increasingly larger share of the discretionary funding allocated for programs that are funded in Labor, Health and Human Services (HHS), and Education appropriations. As a long-term strategy for funding the program, one option Congress could consider is reclassifying the program as an entitlement, and thus providing only mandatory funding for the program each year. Such action would preclude annual funding shortfalls and surpluses in the program, but the initial costs of reclassification could be substantial under congressional budgetary rules.
Congress might also choose to focus on the quality of institutions that receive Pell Grant aid, or examine the role proprietary (for-profit) institutions play in the disbursement of Pell Grant aid to students. .
Date of Report: September 28, 2010
Number of Pages: 45
Order Number: R41437
Price: $29.95
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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Specialist in Education Policy
The Federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. The program is estimated to have provided over $32 billion to approximately 8.3 million undergraduate students in fiscal year (FY) 2010. For FY2010, the total maximum Pell Grant was funded at $5,550. The program is funded primarily through annual appropriations, although mandatory appropriations play a smaller, yet increasing, role in the program.
Pell Grants are need-based aid that is intended to be the foundation for all federal student aid awarded to undergraduates. There is no absolute income threshold that determines who is eligible or ineligible for Pell Grants. Nevertheless, Pell Grant recipients are primarily low-income. In FY2008, an estimated 62% of Pell Grant recipients considered to be dependent upon their parents had a total family income at or below $30,000. Of Pell Grant recipients considered to be independent of their parents, an estimated 83% had a total family income at or below $30,000.
The Pell Grant program has garnered considerable attention over the past several years in Congress. Most recently, the SAFRA Act, passed as part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), established indefinite mandatory appropriations beginning in FY2010 to provide for increases to the maximum award amount funded with annual discretionary appropriations. Prior to the SAFRA Act, the program also received substantial discretionary and mandatory supplemental funding through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The statutory authority for the Pell Grant program was most recently reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315).
The Pell Grant program recently experienced substantial increases in program costs—largely due to a weakened economy, increases in the number of students enrolling in college and applying for Pell Grant aid, and legislative changes that have led to increased benefits for more students. The combination of these factors has led to relatively large funding shortfalls in the program over recent years. Many of the issues concerning the Pell Grant program that confront Congress include potential challenges associated with funding the program—both in the short term and the long term.
In the short term, additional discretionary funding for the Pell Grant program may be required in order to ensure current award levels are maintained, leading to the program comprising an increasingly larger share of the discretionary funding allocated for programs that are funded in Labor, Health and Human Services (HHS), and Education appropriations. As a long-term strategy for funding the program, one option Congress could consider is reclassifying the program as an entitlement, and thus providing only mandatory funding for the program each year. Such action would preclude annual funding shortfalls and surpluses in the program, but the initial costs of reclassification could be substantial under congressional budgetary rules.
Congress might also choose to focus on the quality of institutions that receive Pell Grant aid, or examine the role proprietary (for-profit) institutions play in the disbursement of Pell Grant aid to students. .
Date of Report: September 28, 2010
Number of Pages: 45
Order Number: R41437
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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