The Department of Education administers the Pell Grant Program to promote postsecondary education (colleges and trade schools) for students from low-income households [i]. Grants are made to undergraduate students based on a complex formula taking into account the cost of attendance at the applicable institution and expected family and student contribution. The grants are similar to a scholarship and do not need to be repaid. The federal government makes Pell Grant payments to the institution, and the institution administers the program directly with the student, offsetting tuition, room and board, or paying cash for living expenses. Recipients must be undergraduates and cannot have received a bachelor’s degree previously, with the exception of certain teacher certification programs. Students must also have a high school diploma (or its equivalent). Less than full-time students are eligible for pro-rata awards based on their enrollment status.
The maximum award for the 2022- 2023 school year is $6,495 [ii].
The program spent $27.5 billion in fiscal year 2022 and $30.8 billion in 2023 [v].
Pell Grant Participation Over the Years
The chart above shows the number of applicants and recipients of Pell Grants over the years [iii]
Entire Welfare System
Pell Grants are one of thirteen welfare programs. See how it fits in the entire system on the Welfare Programs Page.
Program Usage
The following statistics are from the 2020-2021 school year [v]: About 39% of postgraduate students in the U.S. receive Pell Grants. The average award totaled $4,325 per recipient. 63% of awards were made to students with individual or family income less than $30,000 per year and 37% above $30,000 per year.
There were approximately 4,500 Pell Grant participating in postsecondary institutions. The distribution of Pell Grants went to the following institutions:
- Public four-year – 44.0%
- Public two-year – 24.4%
- Private – 16.9%
- Proprieitary 14.7%
A private institution is a non-profit entity managed by a non-governmental organization. A proprietary school is a private, non-public business enterprise operated for profit.
Graduation Rates – Pell Grant Students
The graduation rate for all students seeking a 4-year degree was 63.8% in 2019 [vi]. This compares to a graduation rate for students receiving Pell Grants of 51.6%. The graduation rate for students completing a less-than-4-year degree was 35.7%, and for the Pell Grant students 34.9%.
Improper Payments and Fraud
The Office of Management and Budget estimates a 2.2% Improper Payment rate related to the Pell Grant Program, which totals $600 million. See more information on the Welfare Fraud Page.
History of Pell Grants
The following history of the Pell Grant Program was adapted from Wikipedia – Pell Grants [vii] and PellGrantEligibility.net [viii].
The Higher Education Act of 1965 established the first program for federal college grants. The Act, signed by then-President Lyndon B. Johnson on November 8, 1965, was part of the “Great Society” Program. The act began the Educational Opportunity Grant program, the precursor to the Pell Grant program. The grants provided up to $1,000 for needy students to go to college. The Act also introduced the federal work-study program, where the federal government provides money in exchange for the student working a job on campus.
Although the Higher Education Act of 1965 laid the groundwork for the federal work-study and grant programs, its subsequent reauthorization in 1972 substantially expanded these programs. The Nixon administration proposed Basic Educational Opportunity Grants (BEOG) to replace both work-study and the original Educational Opportunity Grants, and Congress decided to use BEOG as the foundation for all other types of federal student aid. The initial authorization of the BEOG was at a maximum of $1,400. The intention of the BEOG was to support low-income students and went only to the students in most need.
The reauthorization of the Higher Education Access Act was in 1980, and the BEOG was renamed “Pell Grants” in honor of U.S. Senator Claiborne Pell of Rhode Island. In 1986, Congress introduced a number of new student loan programs, marking a shift from grant-based aid to loan-based aid that is still present today. The 1992 amendments to the Higher Education Access act simplified the process of applying for federal grants; the amendments created the Free Application for Federal Student Aid (FAFSA) and created a single formula for establishing a student’s need for Pell Grants.
The College Cost Reduction and Access Act of 2007 (CCRA) overhauled the federal student aid program. In addition to cutting loan interest rates, the Act increased the maximum Pell Grant from $4,310 in 2007-08 to $5,400 in 2012-13.
The Student Aid and Fiscal Responsibility Act, or SAFRA, was instituted in the Spring of 2010 and had several effects on a student’s ability to get Pell Grant aid. This bill increased the Pell Grant amount to 5,550 dollars for the 2010-2011 school year, and it implemented a scheduled annual increase beginning in 2013-14 to combat inflation.
Pell Grant Expenditures Over The Years
The graph below shows Pell Grant expenditures per year adjusted for the impacts of inflation stated in 2022 dollars [ix]. Growth over time is due to both an increase in participation (as shown on the chart above) and an increase in scholarship amount. In recent years, the expenditure drop has been due to a decline in participants.
[i] For a description of the Pell Grant Program and related data, see Benefits.gov. Federal Pell Grants. [Internet]. Retrieved August 10, 2023. Available here.
[ii] Department of Education. Student Financial Assistance. The fiscal year 2023 Budget Request. Page 18. [Internet] Retrieved August 10, 2023. Available here.
[iii] Ibid. Pages 16.
[iv] Ibid. Pages 11 – 20.
[v] USGovernmentSpending.com [Internet]. Total for Student Financial Assistance. Retrieved March 15, 2024. Available here.
[vi] Department of Education. Student Aid Overview. The fiscal year 2022 Budget Request. Page O-8 – O-12. [Internet]. Retrieved May 24, 2022. Available here.
[vii] Wikipedia – Pell Grants, [Internet]. Retrieved May 24, 2022. Available here.
[viii] New America. Education Policy. Pell Grant Funding and History. [Internet]. Retrieved May 24, 2022. Available here.
[ix] Data from USGovernmentSpending.com [Internet]. See methodology of inflation adjustment on the web page, Poverty and Spending Over the Years.