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 that considers the cost of attendance at the applicable institution and the 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, which administers the program directly with the student, offsetting tuition, room, and board, or providing cash for living expenses. Recipients must be undergraduates and cannot have previously received a bachelor’s degree, except for certain teacher certification programs. Students must also have a high school diploma (or its equivalent). Part-time students are eligible for pro-rata awards based on their enrollment status.
The maximum award for the 2025- 2026 school year is $8,145 [ii].
The program spent $20.6 billion in fiscal year 2024 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. The Welfare Programs Page explains how each program fits into the overall system.
Program Usage
The following statistics are from the 2022-2023 school year [iv]: Approximately 40% of postgraduate students in the U.S. receive Pell Grants. The average award totaled $4,514 per recipient. 61% of awards were made to students with an individual or family income of less than $30,000 per year, and 39% had an income above $30,000 per year.
Approximately 4,800 postsecondary institutions participate in the Pell Grant Program. The distribution of Pell Grants went to the following institutions:
- Public four-year – 46.4%
- Public two-year – 22.1%
- Private – 15.8%
- Proprietary 15.7%
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
In 2022, the graduation rate for all students seeking a 4-year degree was 64.6% [vi]. This compares to a graduation rate of 53.2% for students receiving Pell Grants. The graduation rate for students completing a degree of less than 4 years was 35.5%, and for Pell Grant students, 33.7%.
Improper Payments and Fraud
The Office of Management and Budget estimates a 2.6% Improper Payment rate related to the Pell Grant Program in fiscal year 2024, including overpayments of $459 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 federal college grant program. 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 to assist needy students with college attendance. The Act also introduced the federal work-study program, in which the federal government provides funding in exchange for students working on-campus jobs.
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 for the BEOG was capped at $1,400. The BEOG was intended to support low-income students and targeted those in the greatest need.
The Higher Education Access Act was reauthorized in 1980, and the BEOG was renamed “Pell Grants” in honor of U.S. Senator Claiborne Pell of Rhode Island. In 1986, Congress introduced several new student loan programs, marking a shift from grant-based aid to loan-based aid that remains in place today. The 1992 amendments to the Higher Education Act simplified the process of applying for federal grants. These amendments created the Free Application for Federal Student Aid (FAFSA) and established a single formula for determining 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 affected a student’s ability to get Pell Grant aid. This bill increased the Pell Grant amount to $5,550 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 impact of inflation, stated in 2023 dollars [ix]. Growth over time is due to both an increase in participation (as shown on the chart above) and an increase in the scholarship amount. In recent years, the expenditure drop has been due to decreased participation.
[i] For a description of the Pell Grant Program and related data, see Benefits.gov. Federal Pell Grants. [Internet]. Retrieved July 13, 2025. Available here.
[ii] Department of Education. Student Financial Assistance. The fiscal year 2025 Budget Request. Page 19. [Internet] Retrieved July 13, 2025. Available here.
[iii] Ibid. Page 18.
[iv] Ibid. Pages 11- 21.
[v] USGovernmentSpending.com [Internet]. Total for Student Financial Assistance. Retrieved March 11, 2025. Available here.
[vi] Department of Education. Student Aid Overview. The fiscal year 2025 Budget Request. Pages 5-10. [Internet]. Retrieved July 13, 2025. Available here.
[vii] Wikipedia – Pell Grants, [Internet]. Retrieved July 13, 2025. Available here.
[viii] New America. Education Policy. Pell Grant Funding and History. [Internet]. Retrieved July 13, 2025. Available here.
[ix] Data from USGovernmentSpending.com [Internet]. See the methodology of inflation adjustment on the web page, Poverty and Spending Over the Years.