Pell by the numbers: The power of expanding the federal grant program

A new brief from NASFAA reveals the stunning impact that doubling Pell could have on future students attending both public and private institutions.
By: | September 8, 2022
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The National Association of Student Financial Aid Administrators (NASFAA), strong proponents of Pell grants, released a brief that shows the impact of that federal aid and the potential benefits of doubling the maximum award for individuals to $13,000.

While that goal is included in President Joe Biden’s 2023 fiscal year budget, the threshold wouldn’t be achieved until 2029, instead incrementally gaining ground each year. If approved as is, maximum Pell grant awards would rise by $1,775 to $8,670 for the 2023-24 academic year. With inflation forcing tuition rises at some institutions, including four-year publics that are short on funding from their states, NASFAA officials said it imperative that more be done to help students in need.

“In addition to being outpaced by inflation, the maximum Pell Grant amount has failed to keep pace with increases in college costs,” the NASFAA report states. “The 2020-21 maximum Pell Grant of $6,495 covered only 26% of the average cost of attendance at a public four-year institution, while the maximum grant in 1975-76 covered more than three-quarters of the cost of attending a public four-year institution.”

Here is a quick look at some of the key numbers NASFAA released on Pell grants:

$6,895: The current maximum award for Pell Grants for this academic year. But not all students who are eligible get that award. Some receive as little as $650 depending on income levels.

6.4 million: The number of students who received Pells in 2020-21. More than 4 million of those came from families whose earnings totaled $30,000 or less.

1.33 million: Number of students whose families earned $6,000 or less in 2019-20 and received Pell grants, the highest percentage (19.83%) of any group of individuals.

58%: Percentage of Black students who were awarded Pell grants in 2015-16, outpacing all other demographic subgroups. By comparison, only 32% of White students got Pell grants. Native American/Alaska native (51%) and Latinx/Hispanic (47%) also had much higher shares.

52%: Students who received Pell aid in 2015-16 and were parents. First-generation students were at 48%, while nearly 40% of student veterans received Pell grants.

-$212: When adjusted for inflation over 10 years, Pell’s purchasing power has decreased ($6,707 in 2011-12 to $6,495 in 2021-22), while costs have risen for students.

2x: If Pell awards were doubled, it would effectively double coverage for the cost of attendance for students at every institution, including privates. So a student who attends a two-year college at an average cost of $20,000 would effectively have 62% of the cost paid for by Pell, up from 31.5% currently. A student attending and living on campus at a four-year private university at around $44,000 would have 30% paid for by Pell, up from just 15% now. Those who would really benefit would be those who attend a community college and live at home. The Pell would eclipse the cost of attendance ($11,000) at 114.9%, doubling the current amount of 57.4% coverage.

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Importantly, as NASFAA points out, “doubling the maximum Pell Grant would also expand the expected family contribution range that qualifies students for Pell, in turn extending eligibility to some additional, moderate-income students who do not currently qualify for the grant.

While doubling Pell does not solve the potential for tuition and fee increases at some institutions, it does give more students purchasing power and the ability for lower-income students to attend more selective colleges and universities. It also would be key in reducing the nation’s student loan debt, which exceeds $1.7 trillion for borrowers.

“One of the most urgent ways we can decrease reliance on student loans is to dramatically increase investments in the federal Pell Grant program,” said Justin Draeger, president and CEO at NASFAA. “If even a fraction of the amount being spent on debt forgiveness were spent on upfront grants like Pell, many low- and middle-income students would borrow much less.”

President Joe Biden, in his Student Debt Relief plan, has proposed $10,000 in forgiveness for individuals earning less than $125,000 ($250,000 for families) and an additional $10,000 for Pell recipients. Though that will help current loan holders, it won’t assist future borrowers. They could get relief under income-driven repayment plans where they would pay no more than 5% of their incomes on student loans and have loans forgiven after 10 years of steady repayments.