Pell Grant Future

The Federal Pell Grant program was designed to help students in low-income families. This financial aid is based on financial need and, together with other forms of Federal aid, is meant to help students obtain a college degree and improve their lives.

In recent years, legislation has altered funding, changing the maximum award per student and establishing program effectiveness measurements that include enrollment figures and graduation rates among low-income and minority students. Changes in legislation have also proposed amendments to Internal Revenue Service (IRS) Code so that the FAFSA forms completed by the student and the student’s family can more easily be integrated with Pell Grant requirements, thereby ensuring that there is no underpayment or overpayment made to the low-income families.

The average Pell Grant student has a family income of $20,000 or less. Because of the rising cost of college tuition, the Pell Grant maximum awards no longer cover a significant portion of student expenses. This lack of parity between tuition and the Pell Grant maximum award means that more than 150,000 college-eligible students will be unable to attend college.

In 1979, a Pell Grant covered approximately 75% of college tuition. In 2006, a Pell Grant covers only about 33% of the total cost of college tuition. Going forward, Congress has cut Pell funding from $13.6 billion to $12.7 billion, reducing the average Pell Grant from $2,400 to $2,300, in spite of the fact that college tuition has increased by more than 35% since 2002. States and university are funding more merit-based financial aid, and reducing the financial aid available for low-income students.

However, there is hope on the horizon. President Bush recently approved a significant increase in Pell Grant awards to take place over the next five years. The maximum Pell Grant award per student will increase to $4,600 in 2008, and by $200 per year each year until 2012. It is estimated that the maximum award will cover 75% of tuition in a public four-year college. The average award will cover approximately 42% of these fees. When combined with other federally funded programs, it is hoped that a student in the low-income bracket may be able to cover up to 85% of college fees in a public four-year institution.