Restore the Purchasing Power of the Pell Grant
The Pell Grant has served as the cornerstone of financial aid for low-income students pursuing higher education since its creation in 1972. This need-based grant provides crucial support for 7.6 million students each year, or about one-third of undergraduates.
Unfortunately, the purchasing power of the Pell Grant has continuously declined since the mid-1970s. The last time Congress made a substantial investment in the Pell Grant program was the 2009-10 stimulus package. At its peak in 1975-76, the maximum Pell award covered more than three-fourths of the cost of attendance – tuition, fees, and living expenses – at the average four-year public university.
Today, it covers less than 30 percent.
Click here to see the data table for this graph.
While Congress’ efforts during the last two appropriations cycles have temporarily and partially curtailed the decreasing strength of the Pell Grant, lawmakers must make bolder investments in this program to empower traditionally underserved students.
What Congress Should Do:
- Returning the purchasing power of the Pell Grant to half the cost of attendance by 2029. NCAN’s long-term investment proposal calls for a return to a Pell Grant that covers 50 percent of the cost of attendance for a public four-year university. Congress could meet this goal by increasing the maximum Pell award by 9 percent for each of the next 10 years.
- Indexing the Pell Grant to the rate of inflation. Once Pell Grants cover 50 percent of the cost of a four-year public education, Congress should reinstate the provision that indexed the program to the rate of inflation. Doing so would guarantee a baseline annual increase and, in turn, sustain Pell’s purchasing power.
- Keeping Pell dollars in the Pell program. Dollars accumulated in the Pell Grant reserve (from unobligated funds in years when Congress appropriated more than students needed) were intended for low-income students and should be used to help students afford a higher education. Removing the dollars from this rainy-day fund, which can support the Pell Grant program in years of high demand, for use other than college affordability for low-income students is tantamount to cutting the Pell Grant program.
Other proposals, under the guise of supporting students or "right-sizing the program," will actually decrease the students who are able to benefit.
What Congress Should Not Do:
- Make changes to Satisfactory Academic Progress (SAP) requirements. Changing the terms of SAP to tighten the merit-based requirements for grant renewal – to a higher grade point average, for example – would force low-income students to meet a loftier bar than their higher-income peers to stay enrolled. SAP requirements for Pell Grant renewal should not be any higher than those requirements that full-pay students face to stay enrolled in good standing at their institution. Click here to learn more about the impact of GPA on Pell Grant recipient retention.
- Increase the number of credits required to be considered a full-time student. Currently, two-thirds of students attend institutions that charge tuition by the credit hour, even for students who take credits within the standard “full-time” range of 12 to 17 credit hours. At community colleges specifically, 90 percent charge per-credit-hour tuition for students at all course load levels. Increasing the number of credits required to be considered full-time to receive federal financial aid would cost students money. Moving from 12 to 15 credit hours, for example, would add increase tuition bills by 25 percent for students enrolled at the current 12 credit threshold. This proposal would be particularly harmful if Congress does not increase the overall amount of aid available.
- Decrease the financial aid eligibility levels. The vast majority of Pell Grant recipients come from families earning $40,000 a year or less. Families must earn less than $23,000 a year to be guaranteed an Expected Family Contribution of $0 – the federal government’s way of saying they shouldn’t have to contribute to the cost of higher education. The fact that these families are all well among the low- to moderate-earners in our country, is a result of the careful targeting of the Pell Grant program. Decreasing financial eligibility below current levels will results in fewer low- and moderate-income students being able to afford college.
All students, regardless of income, age, race, or ethnicity deserve an equal opportunity for a college education. Congress should revitalize the Pell Grant program to make present-day support proportional with original legislative intent so that any American who desires to further his or her education beyond high school is able to do so.