Pell Grant Reform Would Increase Max Award Amount

Pell Grant Reform Would Increase Max Award Amount

June 14, 2021

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The Biden administration and members of Congress have proposed significant changes to the Pell Grant program, which would increase the maximum award value, allow undocumented students to apply, and expand the types of programs the grant money covers.

Currently, Pell Grant recipients can use the funds for college degrees and certificate programs that are at least 600 hours over 15 weeks. The newly proposed Pell Grant changes would allow the grants to cover shorter certificate programs and noncredit courses.

Established in 1972 through reforms to the 1965 Higher Education Act, the federal Pell Grant provides first-time undergraduates with money for college that they don't have to pay back.

When the Pell Grant program was first established, the maximum award could cover 75% of the costs of a four-year degree at a public institution. Today, it covers less than 30%.

Distributed through the FAFSA, Pell Grants are awarded based on financial need. Students whose families make less than $26,000 a year are most likely to receive the full award. For the 2021-22 school year, the maximum Pell Grant award amount is $6,495.

When the grant program was first established, the maximum award could cover 75% of the costs of a four-year degree at a public institution. Today, it covers less than 30%.

About one-third of undergraduates rely on Pell Grants to afford higher education. Students of color are especially likely to rely on the grants. Among Latino/a students, nearly half receive Pell Grant funding, while nearly 60% of Black students do.

Biden's Promise to Double Pell Grant Starts With an Extra $400

President Joe Biden's campaign promise of doubling the maximum award amount would restore some of the original purchasing power of the Pell Grant, bringing it up to covering half the average cost of a bachelor's degree at an in-state, public university.

As president, Biden has put two proposals on the table to update the nearly 50-year-old Pell Grant program. In a discretionary budget plan, Biden proposed increasing the maximum award by $400. Under the proposed American Families Plan, Biden would invest $85 billion in the Pell Grant program to increase the maximum grant by $1,400.

The American Families Plan, included in the administration's budget outline for next year, would also allow undocumented students who are part of the Deferred Action for Childhood Arrivals program to receive Pell Grants for the first time.

Bipartisan Bill to Cover Short-Term Certificates Shot Down

Senator Tim Kaine, a Democrat from Virginia, and Senator Rob Portman, a Republican from Ohio, led the charge to expand the types of educational programs the Pell Grant can cover. Originally designed to help students pay for associate and bachelor's degrees, the current Pell Grant also covers certain vocational programs.

The JOBS Act would greatly expand the number of programs eligible for funding by establishing the Job Training Federal Pell Grant program, allowing students to use Pell Grants for programs that are at least 150 hours over eight weeks.

The JOBS Act had been introduced twice before without success, but proponents expected the economic contraction caused by the COVID-19 pandemic to help the program become law. The bipartisan coalition had hoped to add the provision to the U.S. Innovation and Competitiveness Act, but ultimately it was shot down by the Senate.

Low Graduation Rates Dog Pell Grant Program

Just under 60% of U.S. college students graduate within six years. According to a data analysis published by the Brookings Institution, only half of Pell Grant recipients graduate. At some schools, the rate is even lower, with as few as 1 in 100 Pell Grant recipients earning a degree within six years.

While degrees promise well-paid careers, failing to graduate causes the value of a college education to plummet. Time-consuming, four-year degrees are not practicable for all students or necessary for all careers. Allowing Pell Grant funds to be used for shorter-term programs could help resolve the issue, allowing students to gain credentials quickly. But some researchers suggest that quick credentials don't offer the same leg up as full degrees.

A report from New America found that "very few job training programs can be completed in just eight weeks and still result in the skills needed to obtain a job paying family-sustaining wages." More than half of employed adults with a short-term certificate earned $30,000 or less per year.

Funneling more students into this kind of career preparation could hold back already underserved demographics. According to the report, women and people of color earned less than their counterparts with similar certificates.

Feature Image: Joe Raedle / Staff / Getty Images News

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