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2012 March 19 - 12:00 am

The Federal Pell Grant Program: A Primer

The federal Pell Grant program is the result of the 1972 amendments to the Higher Education Act, championed by Sen. Claiborne Pell, a Democrat from Rhode Island, and signed into law by President Richard M. Nixon. It was first known as the Basic Education Opportunity Grant, and was renamed in 1980 after Pell.

The bipartisan program was designed to assist needy students who otherwise would not be able to attend college. Academically qualified students with demonstrated ability to benefit from attending an eligible college or university can apply for a Pell Grant to help defray costs, based upon a formula established by Congress. Award amounts depend upon financial need, attendance costs, status as a full- or part-time student, and plans to attend college for a full academic year or less. It has been amended numerous times over the years and has contributed to the rapid growth of community colleges.

At the same time, its ability to cover the costs of college has waned as the cost of higher education has skyrocketed. In 1976, the maximum Pell Grant paid for about 72 percent of college costs, while today it only covers about a third. Critics argue that the Pell Grant has not kept up with inflation, and has strayed from its core mission over time.

Both Bill Clinton and George W. Bush pledged a $5,000 Pell Grant during their presidential campaigns, yet as of the 2008-09 budget year, the maximum Pell Grant was $4,731. Congressional investments starting in 2008 raised the maximum Pell Grant to $5,350 in 2009-10, and $5,550 in 2010-11. Students must demonstrate satisfactory academic progress toward a for-credit degree or certificate each term to maintain eligibility. Pell is limited to undergraduates without earned bachelor’s degrees.

The recession that began in 2008 has fueled huge growth in the Pell grant program. Today, some 9.7 million students, and about one-third of all community college students, receive Pell Grants. The result of the rapid growth is a funding shortfall this year of about $5 billion.

Congress took several steps to close the shortfall, some of which disproportionately affect community college students. Students without a high school diploma or a GED certificate are no longer eligible for Pell Grant. Congress also increased the Expected Family Contribution from $23,000 to $32,000. That step increases the threshold which makes a student automatically eligible for a full Pell Grant, and will make it more difficult for students who are working to qualify for the aid.

Funding a maximum Pell Grant of $5,550 in 2011-12 will cost nearly $40 billion. If the maximum Pell is to increase to $5,635 next year, as has been proposed, additional funds will have to be appropriated. Since the Pell Grant program is not an entitlement, if the number of students exceeds the amount budgeted, a supplemental appropriation is required to be passed by Congress.

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