.

Federal Pell Grant Program of the Higher
Education Act: How the Program Works and
Recent Legislative Changes

Cassandria Dortch
Analyst in Education Policy
September 29, 2014
Congressional Research Service
7-5700
www.crs.gov
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Federal Pell Grant Program of the Higher Education Act

Summary
The federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as
amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting
postsecondary education students. The program provided approximately $32 billion to
approximately 8.9 million undergraduate students in FY2013. For FY2014, the total maximum
Pell Grant was funded at $5,730. The program is funded primarily through annual discretionary
appropriations, although in recent years mandatory appropriations have played a smaller yet
increasing role in the program. The statutory authority for the Pell Grant program was most
recently reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315).
Pell Grants are need-based aid that is intended to be the foundation for all federal student aid
awarded to undergraduates. There is no absolute income threshold that determines who is eligible
or ineligible for Pell Grants. Eligibility may be based on a combination of familial circumstance,
income, and assets. Nevertheless, Pell Grant recipients are primarily low-income. In FY2011, an
estimated 74% of all Pell Grant recipients had a total family income at or below $30,000. In the
same year, over half of Pell Grant recipients attended public schools, and approximately two-
thirds of Pell Grant assistance was received by public schools.
The Pell Grant program has garnered considerable attention over the past several years in
Congress, primarily due to the ongoing need for additional program funding from FY2009 to
FY2012. The need for additional funding during this time period was driven by both anticipated
and unanticipated cost increases in the program. Some of the factors contributing to these
increased costs included (1) legislative changes enacted in FY2009 and prior years that led to
increased benefits for more students; (2) increases in the number of students enrolling in college
and applying for Pell Grant aid; and (3) a weakened economy. Congress responded to these
funding needs through numerous legislative efforts in FY2010 through FY2012 by providing
additional mandatory funding to augment discretionary funding for current and future years. This
additional mandatory funding was offset by reductions in spending on the federal student loan
programs and changes to the Pell Grant program’s eligibility and award rules.
Most recently, the Consolidated Appropriations Act of 2014 (P.L. 113-76) provided $22.8 billion
in discretionary funding for the program in FY2014. This funding is augmented by mandatory
appropriations provided by the FY2012 Consolidated Appropriations Act (P.L. 112-74) and
SAFRA Act (enacted as part of the Health Care and Education Reconciliation Act of 2010; P.L.
111-152). Funding provided for the Pell Grant program is exempt from sequestration, pursuant to
provisions included in Section 255(h) of the Balanced Budget and Emergency Deficit Control Act
of 1985 (BBEDCA, Title II of P.L. 99-177), as amended.


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Contents
Introduction ...................................................................................................................................... 1
How the Program Works .................................................................................................................. 2
Student Eligibility ...................................................................................................................... 3
Underlying Concepts and Award Rules ..................................................................................... 5
Underlying Concepts ........................................................................................................... 5
Primary Award Rule .......................................................................................................... 10
Institutional Role ..................................................................................................................... 12
Description of Pell Recipients and Participation ........................................................................... 13
Number of Recipients .............................................................................................................. 13
Income of Recipients ............................................................................................................... 14
Participation Rate by Income .................................................................................................. 14
Sector of Participating Institutions .......................................................................................... 16
Role of the Pell Grant .................................................................................................................... 17
Purchasing Power .................................................................................................................... 17
Receipt of Pell Grants and Other Federal Aid ......................................................................... 19
Program Costs ................................................................................................................................ 21
Current Estimates of Program Costs ....................................................................................... 21
Program Cost Escalation: AY2008-2009 through AY2010-2011 ............................................ 22
Large Increase in the Discretionary Base Maximum Award ............................................. 22
Increase in FAFSA Applications and College Enrollments ............................................... 23
Economic Conditions ........................................................................................................ 23
Legislative Changes to the Federal Need Analysis Calculation and Award Rules ............ 24
Program Cost Decline: Post AY2010-2011 ............................................................................. 24
Program Funding ........................................................................................................................... 25
Role of Discretionary Funding ................................................................................................ 25
Increasing Role of Mandatory Funding ................................................................................... 26
Summary of Recent and Projected Funding (FY2008-FY2021) ............................................. 27
Discretionary Funding Shortfalls and Surpluses ..................................................................... 30
Measures to Address Funding Shortfalls ................................................................................. 32
Pre-2002 ............................................................................................................................ 33
Funding Shortfalls from FY2002 to FY2006 .................................................................... 33
Adoption of FY2006 CBO Scoring Rule .......................................................................... 34
Funding Shortfalls and Surpluses (Post-Scoring Rule to FY2010) ................................... 34
Responding to Additional Funding Needs: FY2011.......................................................... 35
FY2012 Appropriations ..................................................................................................... 36

Figures
Figure 1. Percentage of Tuition, Fees, Room, and Board Covered by the Total Maximum
Pell Grant, by Institution Type and Control: AY1973-1974 to AY2012-2013 ............................ 18

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Tables
Table 1. Pell Grant Award Amounts, AY1973-1974 and Subsequent Years .................................... 8
Table 2. Federal Pell Grant Recipients, AY1973-1974 to AY2012-2013 ...................................... 13
Table 3. Estimated Pell Grant Participation by
Dependency and Total Family Income, AY2007-2008 and AY2011-2012 ................................. 15
Table 4. Estimated Distribution of Undergraduates and Pell Grant Recipients by Type and
Control of Enrolling Institution, AY2011-2012 .......................................................................... 16
Table 5. Pell Grant Aid, Student Loans from All Sources, and Total Aid as Average
Percentages of Cost of Attendance for Undergraduate Students Who Received a Pell
Grant, by Total Family Income ................................................................................................... 20
Table 6. Estimated Pell Grant Program Costs, AY2007-2008 to AY2014-2015 ............................ 21
Table 7. Pell Grant Funding (FY2008 to FY2021) ........................................................................ 28
Table 8. Annual and Cumulative Discretionary Funding Shortfalls in
the Pell Grant Program, FY1973-FY2014 .................................................................................. 30
Table A-1. Authorized Maximum Pell Grant Award Amounts (Pre-SAFRA Act), AY2008-
2009 Through AY2017-2018 ...................................................................................................... 38
Table A-2. Mandatory Add-On Amounts to the Base Maximum Award (Pre-SAFRA Act),
AY2008-2009 Through AY2017-2018 ....................................................................................... 38
Table A-3. Mandatory Appropriations for the Pell Grant Program (Pre-SAFRA Act),
AY2008-2009 Through AY2017-2018 ....................................................................................... 39
Table C-1. Federal Pell Grant Recipients, AY1973-1974 to AY2012-2013................................... 42

Appendixes
Appendix A. Tables on Selected Pell Grant Information Prior to the Enactment of the
SAFRA Act ................................................................................................................................. 38
Appendix B. Mathematical Expression for Calculating the Pell Grant Mandatory Add-On
Award Amounts for AY2014-2015 (FY2014) Through AY2017-2018 (FY2017) ...................... 40
Appendix C. Federal Pell Grant Recipients, AY1973-1974 to AY2012-2013 ............................... 42
Appendix D. Acronyms ................................................................................................................. 44

Contacts
Author Contact Information........................................................................................................... 45
Acknowledgments ......................................................................................................................... 45

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Introduction
The Federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as
amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting
postsecondary education students. The program provided approximately $32 billion to
approximately 8.9 million undergraduate students in FY2013.1 Pell Grants are need-based aid that
is intended to be the foundation for all federal need-based student aid awarded to undergraduates.
The U.S. Department of Education (ED) data suggest that in FY2013, Pell Grants constituted
approximately 24% of all federally supported student aid—including grants, loans, and work
opportunities—that benefit postsecondary education students at all levels.2
The statutory authority for the Pell Grant program was most recently reauthorized through
FY2017 by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315). This
legislation followed the enactment of significant provisions affecting the Pell Grant program in
the College Cost Reduction and Access Act of 2007 (CCRAA; P.L. 110-84). Additional recent
legislation, referred to in this report, includes the following:
• The American Recovery and Reinvestment Act (ARRA; P.L. 111-5)
provided substantial discretionary and mandatory supplemental funding
for the Pell Grant program in FY2009, and when combined with the
FY2009 Omnibus Appropriations Act (P.L. 111-8), also established a
$619 increase in the Pell Grant maximum award for award year3 (AY)
2009-2010;
• The SAFRA Act (enacted as part of the Health Care and Education
Reconciliation Act of 2010; P.L. 111-152) established indefinite
mandatory appropriations for the Pell Grant program, changed the
method by which future additional mandatory add-on amounts are
determined, and provided additional mandatory funds in FY2011 for
general use through the end of FY2012;4
• The FY2011 Continuing Appropriations Act (P.L. 112-10) amended the
HEA to eliminate a provision that allowed for a student to receive two
scheduled Pell Grant awards in the same year, and provided additional
mandatory funds in FY2012 and select future years for general use in the
program;
• The Budget Control Act of 2011 (BCA; P.L. 112-25) provided additional
mandatory funds for the Pell Grant program for FY2012 and FY2013;
and

1 U.S. Department of Education, Fiscal Year 2014 Budget, p. P-5–P-6.
2 Percentage calculated by CRS from data presented in U.S. Department of Education, FY 2014 Education Budget
Summary and Background Information
, p. 47. Total federal aid excludes $28 billion in consolidation loans under which
borrowers consolidate prior loans and any federal tax benefits.
3 The Pell Grant award year begins the first day of July in a given year and ends the last day of June the following year.
4 Similar legislation proposed in the 111th Congress as a standalone bill was entitled the Student Aid and Fiscal
Responsibility Act of 2009 (H.R. 3221).
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• The FY2012 Consolidated Appropriations Act (P.L. 112-74) amended the
HEA to make several changes to the eligibility criteria and award rules
for the Pell Grant program, and provided additional mandatory funds in
FY2012 and select future years for general use in the program.
This report reviews how the program works and provides an analysis of recent program costs and
funding, recipients (numbers and characteristics), and the role the program plays in the
distribution of federal student aid. In addition, this report highlights some of the current
legislative issues pertaining to the program. The appendices at the end of the report describe
selected Pell Grant award and appropriations information as in place prior to the SAFRA Act
(Appendix A), the Pell Grant mandatory add-on calculation (Appendix B), Pell Grant recipient
count history (Appendix C), and acronyms commonly used in the report (Appendix D).
How the Program Works
This section of the report provides an overview of the structure of the Pell Grant program and the
process through which grants are made to students. It describes student eligibility, underlying
concepts and award rules for determining students’ grants, and the role played by postsecondary
institutions in the program.
Briefly, the Pell Grant program provides grants (i.e., aid that does not have to be repaid) to needy
undergraduates. In any year, federal funding is made available to ensure that all eligible students
attending eligible institutions receive Pell Grants.5 To apply for a Pell Grant, students must
complete the Free Application for Federal Student Aid (FAFSA), providing requested financial
and other information, and submit it to a “central processor” under contract with ED.6 The central
processor provides each applicant with a Student Aid Record (SAR) and provides each institution
of higher education (IHE) designated by the applicant with an Institutional Student Information
Record (ISIR). These documents contain the information submitted on the FAFSA and the
calculated expected family contribution (EFC). The EFC is the amount expected to be contributed
by the student and the student’s family toward postsecondary education expenses for the
upcoming award year.
Pell Grants are portable, that is, the grant aid follows students to the eligible postsecondary
education institutions in which they enroll. Institutions that receive valid SARs or valid ISIRs for
eligible Pell applicants are required to disburse Pell funds to students who successfully enroll in
approved coursework. The size of the grant is based, principally, on the financial resources that
students and their families are expected to contribute toward postsecondary education expenses,
and the discretionary base maximum award amount7 that is set in the annual appropriations

5 As explained later in this report, if costs for the Pell Grant program exceed the prescribed appropriation level in any
one year, additional funds can be allocated from the most recently enacted appropriation to pay for obligations incurred
in previous award years. This process of ensuring that grant payments will be made has led some to liken the program
to a “quasi entitlement.”
6 There are several ways to complete and submit a FAFSA for consideration of federal student aid. For instance,
students and families may use FAFSA on the Web, which is an interactive online process. Alternatively, they may
obtain a paper FAFSA from their financial aid office or other locations and submit it to the address listed on the form,
although most applications are submitted electronically.
7 The discretionary base maximum award amount is discussed later in this report.
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process and any additional increases to the discretionary base maximum award funded with
mandatory appropriations8 specified for each year in the HEA.
Student Eligibility
To be eligible for a Pell Grant, a student must meet requirements that apply to federal student aid
in general as well as requirements specific to the Pell Grant program.
Among the requirements generally applicable to federal student aid for AY2014-2015 include
the following:
• Students must be enrolled for the purpose of earning a degree or
certificate at an eligible institution.
• Only students who have a high school diploma (or the recognized
equivalent such as a general education development GED certificate), or
complete a secondary education in a qualified home setting are eligible
for federal student aid.9
• Students must maintain satisfactory academic progress while enrolled in
postsecondary education in order to be eligible for federal student aid.
Satisfactory progress is delineated by policies developed by each
participating IHE, but these policies must meet minimum federal
standards.
• Conviction for possession or sale of drugs while receiving federal student
aid can disqualify students for federal student aid.10
• Students are ineligible if they are in default on a Title IV student loan or
have failed to repay an overpayment on a Title IV grant.
• Students are ineligible if they have not repaid Title IV funds obtained
fraudulently.
• Students must meet citizenship requirements.11
• Males between 18 and 25 years of age must register with the selective
service system in order to be eligible for federal student aid.

8 Annual increases to the discretionary base maximum award funded with mandatory appropriations are discussed later
in this report.
9 Students who were enrolled in an eligible program prior to July 1, 2012, and did not have a high school diploma or
recognized equivalent, or complete a secondary education in a qualified home setting may continue to be considered
eligible by demonstrating an ability to benefit from postsecondary education by passing an examination approved by
ED to be eligible for federal student aid, or by successfully completing six credits or 225 clock hours of college work
applicable to a certificate or degree offered by a postsecondary institution.
10 Periods of ineligibility for federal student aid funds are based on whether the conviction was for the sale or
possession of drugs and whether the student had previous offenses. A conviction for the sale of drugs includes
convictions for conspiring to sell drugs.
11 In general, students must be U.S. citizens or permanent U.S. residents. Individuals with several other entrance
statuses can qualify for aid. Individuals in the United States on a temporary basis, such as those with a student visa or
an exchange visitor visa, are not eligible for federal student aid.
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• Students with an intellectual disability are eligible to receive certain
types of federal student aid.12
Specific eligibility requirements for the Pell Grant program include the following:
• Full-time13 and part-time14 undergraduates15 in non-foreign institutions
are eligible to receive Pell Grants.
• All recipients are subject to a cumulative lifetime eligibility cap on Pell
Grant aid of 12 full-time semesters (or the equivalent). Prior to July 1,
2012, only students who were enrolled after July 1, 2008, were subject to
a lifetime eligibility cap on Pell Grant aid of 18 full-time semesters (or
the equivalent).
• Students who are incarcerated in a federal or state penal institution are
ineligible for Pell Grants.
• Students who are subject to an involuntary civil commitment following
incarceration for a sexual offense (as determined under the FBI’s
Uniform Crime Reporting Program) are ineligible for Pell Grants.
• A student who qualifies for a Pell Grant is eligible to receive an
automatic zero EFC if the student’s parent or guardian was a member of
the U.S. Armed Forces and died as result of performing military service
in Iraq or Afghanistan after September 11, 2001, provided that the
student was under 24 years old or was enrolled at an IHE at the time of
the parent or guardian’s death.16
• The program provides assistance only to financially needy students as
determined under the program’s award rules (see below).

12 A student with an intellectual disability, as defined in the HEA, must be enrolled or accepted for enrollment in a
comprehensive transition and postsecondary program for students with intellectual disabilities and must maintain
satisfactory academic progress as determined by the school for this program. Students with an intellectual disability are
only allowed to receive federal funds from the Pell Grant Program, Supplemental Educational Opportunity Grant
(SEOG), and Work Study program.
13 For the purposes of Pell Grant eligibility, students who are enrolled at least 12 credit hours in a standard semester are
considered full-time.
14 Students enrolled on a less-than-half-time basis (i.e., less than 6 credit hours in a standard semester) are eligible.
15 In general, a student must be enrolled in an undergraduate course of study to receive a Pell Grant. For Pell Grant
eligibility purposes, a student who has received an associate degree, or any certificate or diploma below the
baccalaureate level, and who enrolls in another undergraduate program continues to be considered an undergraduate
student until the student completes the curriculum requirements for a first bachelor’s degree. Students enrolled on at
least a half-time basis in a post-baccalaureate program required by a state for K-12 teacher certification or licensure are
also eligible, as long as the program does not lead to a graduate degree and the enrolling institution does not offer a
baccalaureate degree in education.
16 For students who are not eligible for Pell Grants due to their EFC and who had a parent or guardian die as a result of
military service in Iraq or Afghanistan after September 11, 2001, non-need-based grants called Iraq and Afghanistan
Service Grants (IASG) are available. The amount of the IASG is the same as the Pell Grant the student would be
eligible for if he or she had a zero EFC. IASG payments are adjusted like Pell Grants for students who are enrolled less
than full time, but unlike Pell Grants, these non-need-based grants do not count as estimated financial assistance.
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Underlying Concepts and Award Rules
An eligible student’s annual Pell Grant award is determined on the basis of a set of award rules.
In general, these award rules are designed to ensure that the neediest students (as determined by
the amount of their EFC) receive the highest Pell Grant awards in each award year. Conversely,
students with the lowest need receive the smallest Pell Grant awards in a given award year.
Students who demonstrate a level of need that falls between these two extremes are awarded Pell
Grant aid on a sliding scale. Additionally, Pell Grant awards are prorated for students who attend
on a less-than-full-time basis. An important feature of the Pell Grant award rules is that the grant
is determined without consideration of any other financial assistance a student may be eligible to
receive or may be receiving. This reflects the intention to make the Pell Grant the foundation of a
financial aid package to which other assistance is added.
Some of the underlying concepts associated with the Pell Grant program, as well as the program’s
award rules, are discussed below. In general, provisions are discussed as in effect following the
enactment of the College Cost Reduction and Access Act of 2007 (CCRAA; P.L. 110-84) and as
amended by subsequent legislation are explained at the end of each heading.
Underlying Concepts
Authorized Maximum Award
The authorized maximum award was the annual maximum Pell Grant specified for each award
year in the HEA. The actual maximum award amount a student may receive, however, is
effectively based on the total maximum award, which is the combination of the discretionary base
maximum award amount established in the annual discretionary appropriations process and the
annual increase to this amount funded with mandatory appropriations as specified in the HEA.
The authorized maximum award and total maximum award were equal in only three instances
during the program’s history (AY1975-1976, AY1976-1977, and AY1979-1980). In all other
years, the total maximum award was less than the authorized maximum award.
The authorized maximum Pell Grant award amounts specified in the HEA and established by the
HEOA for AY2009-2010 through AY2014-2015 were eliminated under the SAFRA Act. The
elimination of the authorized maximum award levels from the HEA has no impact on the
determination of maximum award levels. The program remains authorized through FY2017 under
Section 401(a)(1) of the HEA. (See Table A-1 for the authorized maximum Pell Grant award
amounts in effect prior to the SAFRA Act.)
Discretionary Base Maximum Award
The discretionary base maximum award is the amount specified in annual appropriations laws.
The annual appropriations laws determine the amount of discretionary funding available for the
program and specify the base maximum award level for the corresponding award year.
Qualifying Minimum Award
The qualifying minimum Pell Grant award is the minimum amount of Pell aid on which
qualification for the program is based. In other words, a student must qualify for at least this
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minimum amount to be eligible for the program. Prior to the enactment of the SAFRA Act, the
qualifying minimum award amount was equal to 5% of the discretionary base maximum award.
For example, in AY2009-2010, the qualifying minimum award was $243 (i.e., 5% of $4,860).
The SAFRA Act revised the basis for determining the qualifying minimum award. In AY2010-
2011 and AY2011-2012, the qualifying minimum award was equal to 5% of the total maximum
award
, which is the discretionary base maximum award plus a mandatory add-on amount
(described below). For example, in AY2011-2012 the qualifying minimum award was $277, or
approximately 5% of $5,550.
The FY2012 Consolidated Appropriations Act again revised the basis for determining the
qualifying minimum award. The current qualifying minimum Pell Grant award is equal to 10% of
the total maximum award. For example, in AY2014-2015 the qualifying minimum award is $573,
or 10% of $5,730.
Mandatory “Add-On” Award
The CCRAA established mandatory add-on amounts to the discretionary base maximum Pell
Grant award amounts for AY2008-2009 to AY2012-2013. In order to receive the add-on award
under the provisions enacted in the CCRAA, a student had to be eligible for the qualifying
minimum award, which was defined as 5% of the discretionary base maximum award.17
The SAFRA Act eliminated this requirement that a student receive the qualifying minimum award
in order to receive the mandatory add-on award. Beginning in AY2010-2011, the mandatory add-
on award was added to the discretionary base maximum award to determine if a student qualifies
for Pell Grant aid. Additionally, the SAFRA Act changed the mandatory add-on award amount for
AY2012-2013 from $1,090 to $690 and established statutorily defined formulas for determining
the add-on amounts for all future years. (See Table A-2 for the mandatory add-on amounts in
effect prior to the SAFRA Act.)
For AY2010-2011 through AY2012-2013, the mandatory add-on amounts were $690 in each year.
For AY2013-2014, the mandatory add-on amount was determined according to a formula that
was, in part, dependent upon the amount of the discretionary base maximum award specified for
AY2012-2013. The add-on amount for AY2013-2014 was determined by (1) adjusting the total
maximum award amount of $5,550 (i.e., the $4,860 discretionary base maximum award for
AY2012-2013 as established by the FY2012 Consolidated Appropriations Act plus the $690 add-
on amount established by the SAFRA Act) for inflation—the change in the Consumer Price Index
for All Urban Consumers (CPI-U) over the period from December 2011 to December 2012;18 (2)

17 Congress created a more complicated system of awarding Pell Grants in the CCRAA with the purpose of targeting
the add-on mandatory funds to the most needy students who would otherwise already qualify for a Pell Grant. By
awarding the mandatory add-on amount only to students who qualify for the program based on a proportion of the
discretionary base maximum amount instead of a proportion of the higher total maximum award amount, Congress
restricted expansion of the program for students who have a slightly higher EFC and who would have otherwise
qualified based on the higher total maximum amount.
18 Section 401(b)(7)(C)(iv)(I) of the HEA provides the Secretary of Education with the authority to determine the
annual adjustment percentage used in the formula. The annual adjustment percentage is equal to the percentage change
in the CPI-U (as published by the U.S. Department of Labor) for the most recent calendar year ending prior to the
beginning of each award year.
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subtracting $4,860 from this amount; and (3) rounding this amount to the nearest $5. Per this
formula, the add-on amount for AY2013-2014 was $785, as published by ED.19
For AY2014-2015 through AY2017-2018, the mandatory add-on amount in each year is
determined by (1) adjusting the previous year’s total maximum award for inflation—the change
in the CPI-U, as measured from the most recently completed calendar year before the start of
each applicable award year; (2) subtracting the previous year’s discretionary base maximum
award; and (3) rounding this amount to the nearest $5. If in any year during this period the
previous year’s discretionary base maximum award is less than or equal to $4,860, then the
mandatory add-on amount is determined by adjusting the previous year’s total maximum award
amount for the change in the CPI-U, as measured from the most recently completed calendar year
before the start of each applicable award year; subtracting $4,860 from this amount; and finally
rounding to the nearest $5. ED calculated a mandatory add-on amount of $870 for AY2014-2015
and estimated an amount of $970 for AY2015-2016.20 Appendix B provides a mathematical
expression and example of this formula for AY2014-2015 through AY2017-2018.
For AY2018-2019 and all subsequent award years, the mandatory add-on amount will be the same
amount as determined for AY2017-2018 by the formula described above.
A significant reduction in the discretionary base maximum award amount in AY2015-2016 could
result in a significant reduction or elimination of future mandatory add-on amounts. This is a
result of the aforementioned formula for AY2014-2015 through AY2017-2018. In short, under a
scenario in which the discretionary base maximum award amount falls substantially below $4,860
in AY2015-2016, the total maximum award in AY2016-2017 could also fall below $4,860, such
that the formula could result in a negative value for the mandatory add-on amounts in AY2017-
2018 and all subsequent award years (see Appendix B).
“Bump” Award
The so-called bump award is an additional statutory increase to the qualifying minimum Pell
Grant award, ensuring that students who are eligible for the qualifying minimum award receive a
small increase in Pell aid.21 Prior to the enactment of the SAFRA Act, the bump award was equal
to up to 5% of the discretionary base maximum award.
The SAFRA Act revised the basis for calculating the bump award. In AY2010-2011 and AY2011-
2012, the bump award could equal up to 5% of the total maximum award. For example, in
AY2011-2012 the bump award was $277, or approximately 5% of $5,550, for students who were
eligible to receive the qualifying minimum award.
The FY2012 Consolidated Appropriations Act eliminated the bump award for AY2012-2013 and
future years. Therefore, no additional aid will be added to the qualifying minimum award under
current award rules.

19 President’s FY2015 Budget.
20 President’s FY2015 Budget.
21 In effect, the increase to the qualifying minimum award serves to ensure that the program will not disburse grants in
such small amounts that they would not be a meaningful contribution to supporting students’ educational pursuits.
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Effective Minimum Award
The effective minimum award is the minimum amount of Pell Grant aid available to a student in
any given year as determined by law. Prior to the enactment of the SAFRA Act, the effective
minimum award varied by enrollment status and included the qualifying minimum award based
on the discretionary base maximum award, the bump award, and a percentage of the mandatory
add-on award.22 As discussed above, the SAFRA Act revised the mandatory add-on amounts, and
consequently, the basis for calculating the qualifying minimum award. The effective minimum
award for AY2010-2011 and all future years is equal to 10% of the total maximum award amount
and is the same for all eligible students, regardless of enrollment status.
Since the FY2012 Consolidated Appropriations Act eliminated the bump award beginning on July
1, 2012, the qualifying minimum award and effective minimum award are now the same.
Table 1 shows the award levels associated with each of the concepts discussed above—the
authorized maximum award, the discretionary base maximum award, the mandatory add-on
award, the total maximum award, and the effective minimum award—from 1973-1974 award
year through AY2018-2019 and beyond.
Table 1. Pell Grant Award Amounts, AY1973-1974 and Subsequent Years
Discretionary
Authorized
Base
Total
Effective
Maximum
Maximum
Mandatory Add-
Maximum
Minimum
Award Year
Award
Award
On Award
Award
Award
(AY)
($)
($)
($)
($)
($)
1973-1974 1,400
452
N/A
452
50
1974-1975 1,400
1,050
N/A
1,050
50
1975-1976 1,400
1,400
N/A
1,400 200
1976-1977 1,400
1,400
N/A
1,400 200
1977-1978 1,800
1,400
N/A
1,400 200
1978-1979 1,800
1,600
N/A
1,600
50
1979-1980 1,800
1,800
N/A
1,800 200
1980-1981 1,800
1,750
N/A
1,750 150
1981-1982 1,900
1,670
N/A
1,670 120
1982-1983 2,100
1,800
N/A
1,800
50
1983-1984 2,300
1,800
N/A
1,800 200
1984-1985 2,500
1,900
N/A
1,900 200
1985-1986 2,600
2,100
N/A
2,100 200
1986-1987 2,600
2,100
N/A
2,100 100
1987-1988 2,300
2,100
N/A
2,100 200

22 By definition, the effective minimum award for the program would apply to students enrolled on a less-than-half-
time basis. Prior to the SAFRA Act, the amount of the mandatory add-on award was determined in proportion to a
student’s enrollment status, which would have affected the effective minimum award a student would receive.
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Discretionary
Authorized
Base
Total
Effective
Maximum
Maximum
Mandatory Add-
Maximum
Minimum
Award Year
Award
Award
On Award
Award
Award
(AY)
($)
($)
($)
($)
($)
1988-1989 2,500
2,200
N/A
2,200 200
1989-1990 2,700
2,300
N/A
2,300 200
1990-1991 2,900
2,300
N/A
2,300 100
1991-1992 3,100
2,400
N/A
2,400 200
1992-1993 3,100
2,400
N/A
2,400 200
1993-1994 3,700
2,300
N/A
2,300 400
1994-1995 3,900
2,300
N/A
2,300 400
1995-1996 4,100
2,340
N/A
2,340 400
1996-1997 4,300
2,470
N/A
2,470 400
1997-1998 4,500
2,700
N/A
2,700 400
1998-1999 4,500
3,000
N/A
3,000 400
1999-2000 4,500
3,125
N/A
3,125 400
2000-2001 4,800
3,300
N/A
3,300 400
2001-2002 5,100
3,750
N/A
3,750 400
2002-2003 5,400
4,000
N/A
4,000 400
2003-2004 5,800
4,050
N/A
4,050 400
2004-2005 5,800a 4,050 N/A 4,050 400
2005-2006 5,800a 4,050 N/A 4,050 400
2006-2007 5,800a 4,050 N/A 4,050 400
2007-2008 5,800a 4,310 N/A 4,310 400
2008-2009 5,800a 4,241 490 4,731 523b
2009-2010 6,000
4,860
490
5,350 609bc
2010-2011 None
Specified
4,860
690
5,550
555
2011-2012 None
Specified
4,860
690
5,550
555
2012-2013 None
Specified
4,860
690
5,550
577d
2013-2014 None
Specified
4,860
785
5,645
582d
2014-2015 None
Specified
4,860
870
5,730
587d
2015-2016 None
Specified
TBD
TBDe TBD
TBD
2016-2017 None
Specified
TBD
TBDe TBD
TBD
2017-2018 None
Specified
TBD
TBDe TBD
TBD
2018-2019
None Specified
TBD
Same amount as
TBD TBD
(and beyond)
in AY2017-2018
Sources: U.S. Department of Education, AY2009-10 Pell Grant End-of-Year Report; HEA; appropriations acts,
FY2010-FY2014; and U.S. Department of Education, Federal Pell Grant Payment and Disbursement Schedules, 2010-
2011 to 2014-2015.
Notes: TBD = to be determined; N/A = not applicable.
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a. Prior to the reauthorization of the HEA by the HEOA in 2008, Congress passed measures to extend the
HEA allowing for the continuation of the Pell Grant program. The last authorized maximum award specified
in law prior to the HEOA was $5,800 for AY2003-2004; therefore, the authorized maximum award is listed
as $5,800 from AY2004-2005 through AY2008-2009 in this table.
b. This amount is the minimum amount of aid awarded to a student attending on a less-than-half-time basis.
c. Table 1 in the AY2009-10 Pell Grant End-of-Year Report shows this amount as $976, which is the minimum
award a student attending on a ful -time basis would receive. The minimum amount of aid an eligible student
could receive in AY2009-2010 was $609, or 10% of $4,860 plus 25% of $490.
d. Although the statutory effective minimum is 10% of the total maximum, the actual minimum award differs
because ED uses mid-points for both the EFC and COA. The statutory effective minimum award amount
for a full time student was $555 in AY2012-2013, $564 for AY2013-2014, and $573 for AY2014-2015.
e. The mandatory add-on amount will be determined based on the formula detailed in Figure B-1.
Primary Award Rule
The primary Pell Grant award rule, as revised by the SAFRA Act, is that a student’s annual grant
is the least of (1) the total maximum Pell Grant minus the student’s EFC, or (2) Cost of
Attendance (COA) minus EFC,23 and is ratably reduced for a student who enrolls on a less-than-
full-time basis. Most students are awarded Pell Grant aid based on the first condition of this rule
(i.e., Pell Grant Award = Total Maximum Pell Grant – EFC), since the total maximum Pell Grant
award available to a student in an award year is typically less than the attending institution’s
COA.
Prior to the enactment of the SAFRA Act, a student’s Pell Grant award was determined by taking
the least of (1) the discretionary base maximum Pell Grant award minus the student’s EFC, or (2)
COA minus EFC. Next, this award amount was ratably reduced if a student enrolled on a less-
than-full-time basis. Finally, the mandatory “add-on” award, as prescribed in the HEA and also
ratably reduced for a student enrolled on a less-than-full-time basis, was added to the student’s
award.
Some of the concepts that are specifically related to the primary award rule are discussed in detail
below.
Expected Family Contribution (EFC)
The EFC is the amount that, according to the federal need analysis methodology, can be expected
to be contributed by a student and the student’s family toward the student’s cost of education.
This calculation is based on consideration of available income and, for some families, available
assets. Basic living expenses, federal income tax liability, retirement needs, and other expenses
are taken into account in this process. Different EFC formulas are applied to three different
groups of students: those who are considered dependent on their parents (the EFC formula
assesses the financial resources of both the parents and the dependent student); independent
students with no dependents, other than a spouse (if any); and independent students with

23 The HEA prohibits the Pell Grant from exceeding the difference between the COA and the EFC. This precludes the
awarding of a Pell Grant in excess of what a student might need to cover the COA after taking the EFC into account.
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dependents other than a spouse (e.g., children).24 The EFC determination utilizes financial
information submitted by the aid applicant on the FAFSA.
Automatic Zero EFC
Students who apply for federal student aid and meet certain qualifications automatically receive a
zero EFC.25 A student with a zero EFC would receive the total maximum Pell Grant award if
enrolled full-time at an institution where the COA is equal to or exceeds the total maximum Pell
Grant award.
The FY2012 Consolidated Appropriations Act changed the annual income threshold26 for
determining whether a student automatically qualifies for a zero EFC from $31,000 to $23,000
beginning in AY2012-2013, with thresholds in future award years indexed to inflation. The
income threshold was accordingly increased to $24,000 in AY2013-2014 and remained
unchanged in AY2014-2015.27
Maximum EFC for Pell Grant Eligibility
For AY2010-2011 and AY2011-2012, the maximum EFC for Pell Grant eligibility was equivalent
to 95% of the total maximum Pell Grant award. Prior to the SAFRA Act, the maximum EFC for
Pell Grant eligibility was equivalent to 95% of the discretionary base maximum award.
The FY2012 Consolidated Appropriations Act effectively changed the maximum eligible EFC for
Pell Grant eligibility to 90% of the total maximum award beginning in AY2012-2013 by
eliminating the bump award (as explained earlier). In AY2014-2015, a student with an EFC of
$5,157 would receive a minimum award of $587. A student with an EFC above $5,157 would not
be eligible for a Pell Grant in AY2014-2015.
Cost of Attendance (COA)
The cost of attendance (COA) is a measure of a student’s educational expenses for the period of
enrollment. In general, it is the sum of (1) tuition and fees; (2) an allowance for books, supplies,

24 For federal student aid purposes and the calculation of the EFC, an individual is considered independent of his or her
parents (i.e., parental income and assets are not considered in determining the EFC), if the individual is at least 24 years
of age by December 31 of the award year; is married; is a graduate or professional student; is a veteran of the U.S.
Armed Forces or is currently serving on active duty in the military; has dependents other than a spouse; has been in
foster care, an orphan, or a ward of the court (anytime since the age of 13); is an emancipated minor or in legal
guardianship as determined by a court; is an unaccompanied, homeless youth or self-supporting, at risk of being
homeless; or is deemed independent by a financial aid officer for “other unusual circumstances.”
25 Dependent students and independent students with dependents other than a spouse can qualify for an automatic zero
EFC. In general, these students must have received means-tested benefits from other federal programs or have been
eligible to file or have filed certain federal income tax returns, or have been a dislocated worker. In addition, parents or
students must have family income levels at or below certain income thresholds. Children of deceased Iraq/Afghanistan
service members who are otherwise eligible to receive a Pell Grant also qualify for an automatic zero EFC. One of the
benefits of qualifying for an automatic zero EFC is that it greatly reduces the response burden associated with
completing financial aid forms.
26 For tax filers, this threshold is based on the adjusted gross income (AGI) amount. For non-tax-filers, the threshold is
based on earned income.
27 U.S. Department of Education, Expected Family Contribution (EFC) Formula Guide, 2013-2014 and 2014-2015.
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transportation, and miscellaneous personal expenses; (3) an allowance for room and board;28 and
(4) for a student with dependents, an allowance for costs expected to be incurred for dependent
care. For determining a student’s Pell Grant award, the cost of attendance amount is based on the
full-year (i.e., approximately nine months of a traditional college calendar) costs for a full-year
student and must be prorated for students who attend on a less-than-full-time basis. Additionally,
for the purpose of determining a student’s Pell Grant award, institutions may use average costs for
students at their school, rather than calculating actual expenses for each student.29
Year-Round Pell Grants
Eligible students enrolled from July 1, 2009, to June 30, 2011, received so-called “year-round”
Pell Grants, or up to two scheduled30 awards in a single award year. For example, a second
scheduled Pell Grant award may have supported a summer term in addition to the regular
academic year. To qualify, students were required to be enrolled on at least a half-time basis in a
program of study longer than one academic year in length and to have received 100% of the first
scheduled award during the academic year. This provision was enacted in the HEOA. The
FY2011 Continuing Appropriations Act eliminated this provision effective July 1, 2011.
Institutional Role
To be eligible for the HEA Title IV programs, including the Pell Grant program, an IHE must
meet several statutory and regulatory eligibility criteria. For a description of institutional
eligibility requirements, see CRS Report R43159, Institutional Eligibility for Participation in
Title IV Student Financial Aid Programs
, by Alexandra Hegji and Shannon M. Mahan. The IHE
may be a public or private nonprofit IHE, a private for-profit (sometimes referred to as
proprietary) postsecondary institution, or a postsecondary vocational institution.
An eligible institution’s role in the Pell Grant program primarily involves determining student
eligibility, disbursing awards, adjusting awards to ensure students do not receive more assistance
than they are eligible for, record keeping, and reporting to ED.
An eligible institution calculates a student’s Pell Grant award using the COA and enrollment
status it has determined for the student, and applying these values with the student’s EFC to the
Pell Grant payment schedules published annually by ED. Pell Grants must be paid out in
installments over the academic year. A student receives a Pell Grant only for the payment period
for which he or she is enrolled. Generally, institutions credit a student’s account with the Pell
payment to meet unpaid tuition, fees, room, and board; any remaining Pell funds are paid directly
to the student to cover other living expenses.
ED makes funds available to schools so that they can disburse Pell Grant awards.31 The school is
authorized sufficient funds to cover its records of actual disbursements. Institutions may then

28 The cost of attendance includes an allowance to cover the basic expenses incurred for board only for students living
in housing provided on a military base or for which a basic living allowance is provided.
29 Average COA amounts must be based on the same category of students. For example, institutions cannot combine
COA amounts for separate enrollment statuses and award aid to a student on the basis of this average.
30 A scheduled award is defined as the maximum Pell aid a full-time student may receive for an award year based on
the Pell Grant Payment and Disbursement Schedules issued by ED.
31 U.S. Department of Education, 2014-2015 COD Technical Reference, Volume VI, Section 2.
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draw down the available funds using one of several methods. Under the advance payment method
or heightened cash monitoring 1 method, an institution may record disbursements up to seven
days before the actual disbursement and then draw down its available balance directly. Schools
for which ED has a concern about their ability to meet Title IV participation requirements may be
required to use the heightened cash monitoring 2 method or the reimbursement payment method,
under which the institution may only report disbursements on or after the disbursement date, and
ED draws down the school’s available funds on their behalf. In addition, the Pell Grant program
pays participating institutions an administrative cost allowance of $5 per enrolled recipient.
Description of Pell Recipients and Participation
This section provides descriptive statistics of Pell Grant recipients (numbers and characteristics)
and the institutions that they attend. The data may inform discussion regarding the extent to
which the program achieves the policy goal of improving access to higher education for
financially needy individuals.
Number of Recipients
The Pell Grant program reaches a significant portion of undergraduates each year. In AY2011-
2012, the latest available data, 41% of all undergraduates were estimated to have received Pell
Grants.32 During the program’s first year in AY1973-1974, approximately 176,000 students
received a Pell Grant award.33 Since then, the annual number of Pell Grant recipients has risen
substantially. Based on public data reported annually by ED, the number of Pell Grant recipients
reached an all-time high of 9,444,000 in AY2011-2012, before declining by 486,000, or 5.14%, to
8,959,000 in AY2012-2013. Table 2 shows the number of Pell Grant recipients over the last five
years, from AY2008-2009 to AY2012-2013, as well as the annual change and annual percentage
change during this time. Appendix C displays Pell Grant recipients from AY1973-1974 to
AY2012-2013. It is important to note that myriad factors34 can affect the number of Pell Grant
recipients in any given award year.
Table 2. Federal Pell Grant Recipients, AY1973-1974 to AY2012-2013
Award Year
Pell Grant Recipients
Annual Change
% Change
2008-2009 6,157,000 614,000

11.08%
2009-2010 8,094,000 1,937,000

31.46%
2010-2011 9,308,000 1,214,000

15.00%

32 CRS analysis of AY2011-2012 data from the National Postsecondary Student Aid Study (NPSAS). A CRS analysis
of AY2003-2004 and AY2007-2008 NPSAS data shows that the percentage of all undergraduates estimated to have
received Pell Grants in each of these academic years was 27%.
33 U.S. Department of Education, AY2011-12 Pell Grant End of Year Report, Table 1.
34 Such factors include, but are not limited to, (1) amendments to the HEA that affect the federal need analysis
calculation and Pell Grant award rules; (2) changes in the maximum grant level specified in annual appropriations bills;
(3) trends in enrollment at postsecondary institutions; and (4) macroeconomic and microeconomic variables.
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Award Year
Pell Grant Recipients
Annual Change
% Change
2011-2012
9,444,000
136,000
1.46%
2012-2013 8,959,000 (486,000)
(5.14%)
Source: U.S. Department of Education, AY2012-13 Pell Grant End-of-Year Report.
Note: Recipient figures rounded to the nearest thousand.
Income of Recipients
There is no absolute income threshold that determines who is eligible or ineligible for a Pell
Grant award. Nevertheless, Pell Grant recipients are primarily low-income. In AY2012-2013, an
estimated 61%35 of dependent Pell Grant recipients had a total family income36 at or below
$30,000. Independent Pell Grant recipients’ income is generally lower than their dependent
counterparts. In AY2011-2012, an estimated 83%37 of independent Pell Grant recipients had a
total income at or below $30,000.38
It is important to note, however, that a small percentage of Pell Grant awards go to mid- and high-
income families. For the most part, these awards are smaller than the average Pell Grant award
for all students and are typically provided to dependent students from families who have multiple
students enrolled in postsecondary education at the same time.39
Participation Rate by Income
Although the primary purpose of the program is to aid needy undergraduate students, a significant
number of low-income undergraduate students who enroll in postsecondary education do not
receive a Pell Grant, primarily because they did not apply for federal financial aid.40 Table 3,
which presents a CRS analysis of data from the National Postsecondary Student Aid Study
(NPSAS), shows the percentage of dependent and independent undergraduates from different
income levels who were Pell recipients in AY2007-2008 and AY2011-2012. Two participation
rates are provided for each income level and dependency status; one measuring the percentage of
all undergraduate students (of the relevant dependency status) who were Pell recipients and the
other providing the percentage of undergraduate aid applicants (of the relevant dependency
status) who received a Pell Grant.

35 In the previous year (FY2011), this percentage was the same.
36 Total family income is defined here as the adjusted gross income (if a tax filer), any taxable income (if not a tax
filer), and any non-taxable income.
37 In the previous year (FY2011), this percentage was 84%.
38 Data in this paragraph taken from page Q-22 of U.S. Department of Education, FY2015 Justifications of
Appropriation Estimates to the Congress
.
39 According to Table 3A of the AY 2012-13 Pell Grant End-of-Year Report, approximately 2,236 Pell Grant recipients,
or less than 0.1% of the total recipient population, had a family income above $100,000.
40 Furthermore, some students who apply and qualify for Pell Grant aid do not enroll in postsecondary institutions.
Some have labeled this measure as a “show-up” rate. According to data provided in Table 1 of the AY 2012-13 Pell
Grant End-of-Year Report,
approximately 68% of Pell Grant applicants who applied and qualified for Pell Grant aid
based on their EFC level in AY2012-2013 actually enrolled and received a Pell Grant.
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In all but one income category, Table 3 shows that the percentage of undergraduates and aid
applicants receiving a Pell Grant, regardless of dependency, is higher in AY2011-2012 than in
AY2007-2008. For example, approximately 81.8% of all dependent undergraduates from families
with total family income of less than $10,000 were Pell recipients in AY2011-2012 compared to
63.8% in AY2007-2008. Also, Table 3 shows that receipt of Pell Grants is higher among aid
applicants than among total undergraduates. In AY2011-2012, approximately 65.0% of all
independent undergraduates with total income of less than $5,000 were Pell recipients, and about
81.3% of aid applicants in that income category received a Pell Grant. Finally, Table 3 shows
that, in general, as income rises, participation rates in the Pell program fall for dependent and
independent students. Comparing dependent undergraduates in AY2011-2012, over 81% with
total family income of less than $10,000 were Pell recipients, and less than 5% with total family
income of $60,000 or more were Pell recipients.
Table 3. Estimated Pell Grant Participation by
Dependency and Total Family Income, AY2007-2008 and AY2011-2012

Estimated Percentage Receiving Pell Grantsa
Total Family Incomeb
All Students
All Federal Aid Applicants
Dependent Undergraduatesc AY2007-2008 AY2011-2012 AY2007-2008 AY2011-2012
Less than $10,000
63.8
81.8
81.4
90.1
$10,000-$19,999
72.9 82.1 87.1 91.4
$20,000-$29,999
65.1 75.5 80.8 90.7
$30,000-$39,999
53.4 65.6 70.9 83.9
$40,000-$49,999
32.6 63.1 49.7 77.2
$50,000-$59,999
15.7 44.2 25.9 51.9
$60,000 or more
0.3
4.3
0.6
7.0
Independent Undergraduatesd AY2007-2008 AY2011-2012 AY2007-2008 AY2011-2012
Less than $5,000
53.2
65.0
78.3
81.3
$5,000-$9,999
65.1 69.0 84.5 82.9
$10,000-$19,999
52.0
65.2
73.8
82.4
$20,000-$29,999
34.1 45.4 53.2 62.8
$30,000-$49,999
27.9 33.9 54.9 54.1
$50,000 or more
0.2
13.4
0.8
33.2
Source: CRS estimates of 2007-2008 and 2011-2012 data from the U.S. Department of Education, National
Postsecondary Student Aid Study (NPSAS).
Note: How to read Table 3: The first row shows that 81.8% of al dependent undergraduate students with a
total family income of less than $10,000 received a Pel Grant in AY2011-2012, whereas 90% of dependent
undergraduate students with a total family income of less than $10,000 who applied for Federal Student Aid
received a Pell Grant in AY2011-2012.
a. Includes students enrolled at any intensity.
b. Total family income is defined here as the adjusted gross income (if a tax filer), any taxable income (if not a
tax filer), and any non-taxable income.
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c. Includes income of dependent student and parents.
d. Includes income of independent student and spouse.
It is noteworthy that some low-income undergraduate students, particularly independent
undergraduates, did not receive a Pell Grant in either AY2007-2008 or AY2011-2012. Of
undergraduates with total family income of $10,000-$19,999, approximately 82.1% of
dependents and 65.2% of independents received a Pell Grant in AY2011-2012 (Table 3). The
discrepancy may be related to the portion of low-income undergraduate students who do not
apply for federal student aid, students not following up with the school financial aid office, family
assets that make them ineligible for a Pell Grant, or other factors.41 The fact that some low-
income undergraduates do not apply for aid is evidenced by the higher percentage of aid
applicants receiving a Pell Grant compared to all undergraduates in the same income category. It
is possible that some low-income students who did not apply for aid may have believed they were
not eligible, or they may have had sufficient resources to meet their costs. At least some of those
who believed they were ineligible for aid may have actually been eligible. Among other possible
explanations are that very low-income students in particular find the federal financial aid
application process too complex to pursue, or that such students may not be aware of the
availability of federal student aid. Additionally, aid outreach efforts at low-cost institutions may
be less vigorous. Furthermore, some students and family members do not wish to disclose
information related to their financial resources, and thus, do not apply for aid.
Sector of Participating Institutions
Recently, there has been a renewed focus on the distribution of Pell Grant aid by sector of
institution. Table 4 shows the AY2011-2012 enrollment distribution by institutional sector of
undergraduates who do not receive a Pell Grant and undergraduates who do receive Pell Grants.
Each group is disaggregated for dependent and independent students. Pell Grant recipients were
more likely to attend private for-profit institutions than undergraduates who did not receive a Pell
Grant. For example, 8.8% of dependent Pell Grant recipients attended a private for-profit
institution compared to 3.4% of undergraduates who did not receive a Pell Grant. In addition, a
smaller proportion (37.3%) of independent Pell Grant recipients attended public 2-year
institutions than independent undergraduates who did not receive a Pell Grant (50.7%).
Table 4. Estimated Distribution of Undergraduates and Pell Grant Recipients by
Type and Control of Enrolling Institution, AY2011-2012
Dependent Undergraduates
Independent Undergraduates
Type and
Control of
% Not Receiving
% Pell Grant
% Not Receiving
% Pell Grant
Institution
Pell
Recipients
Pell
Recipients
Public four-year
38.2
36.2
20.2
19.2
Private nonprofit
16.7 14.9 8.0 6.8
four-year
Public two-year
31.7
31.2
50.7
37.3

41 The ability to speak with confidence about the income levels of students who did not file a FAFSA is adversely
affected by certain data quality issues. For non-aid filers, income information is derived from surveys of students and
from imputation.
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Dependent Undergraduates
Independent Undergraduates
Type and
Control of
% Not Receiving
% Pell Grant
% Not Receiving
% Pell Grant
Institution
Pell
Recipients
Pell
Recipients
Private for-profita 3.4
8.8
13.2
27.9
Other or more
than one
10.0
8.9
7.9
8.8
institution
Total 100.0
100.0
100.0
100.0
Source: CRS estimates from 2011-2012 NPSAS.
Note: Due to rounding, sum of column entries may not equal column totals.
a. Private for-profit institutions are sometimes referred to as “proprietary” institutions.
Role of the Pell Grant
The Pell Grant is intended to function as the foundation aid for financially needy undergraduates;
all other need-based federal student aid is to build on the Pell Grant.42 As described earlier, other
financial aid received by a student is not taken into account in determining a student’s Pell Grant.
How well does the Pell Grant currently function as the foundation aid? This section explores this
question by analyzing the purchasing power of the Pell Grant and the distribution of other federal
aid to Pell recipients.
Purchasing Power
The total maximum Pell Grant, available to students with a zero EFC who enroll on a full-time
basis, is often used as a gauge of the Pell Grant program’s level of support in each year. In
AY2012-2013, the total maximum grant ($5,550) covered approximately 62% of the average
tuition, fees, room, and board at public two-year institutions, 32% at public four-year institutions,
and 16% at private four-year institutions.43 Figure 1 compares the total maximum grant to
average undergraduate tuition, fees, room, and board charges at public two-year, public four-year,
and private four-year institutions between AY1973-1974 and AY2012-2013. It is evident that the
maximum was at its peak relative to these average charges during the 1970s.

42 Eligibility for the Pell Grant program and annual Pell Grant level maximum award levels are also used for
determining eligibility or award levels in other federal programs. For example, individuals can receive a national
service educational award under the Serve America Act that is equal to the annual Pell Grant maximum award.
43 Under Section 472 of the HEA, other allowances for the cost of attendance for the purpose of awarding Pell Grant
aid are provided, such as costs associated with transportation and dependent care expenses. These costs are not
considered in this section of the report in order to maintain a comparable trend across institutional sectors. If these costs
are included, the average amount of coverage by the Pell Grant maximum would be less for all types of institutions.
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Figure 1. Percentage of Tuition, Fees, Room, and Board Covered by the Total
Maximum Pell Grant, by Institution Type and Control: AY1973-1974 to AY2012-2013
120%
100%
80%
60%
40%
20%
0% 19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
11
-7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
Award Year
Two-Year Public
Four-Year Public
Four-Year Private

Sources: CRS calculations using data from National Center for Education Statistics (NCES), 2013 Advance
Release Selected Tables of the Digest of Education Statistics
, Table 330.10.
Notes: The purchasing power of the Pel Grant through AY1992-1993 was constrained by a statutory cap on
the percentage of cost of attendance (COA) that a Pel Grant could cover. From AY1973-1974 to AY1984-1985,
the cap was 50%; from AY1985-1986 to AY1992-1993, the cap was 60%. After that time there has been no
absolute limit on the percentage of COA that can be covered.
From the mid-1980s through the early 1990s, the total maximum Pell Grant lost ground relative
to average tuition, fees, room, and board at public and private four-year institutions. Despite
recent increases in coverage due to an increase in the Pell Grant maximum award level, the
coverage for AY2012-2013 is slightly below that of AY2011-2012 due to an increase in tuition,
fees, room, and board at all institutions and no change in the Pell Grant maximum award level
from AY2011-2012.
Another approach to measuring the purchasing power of the maximum Pell Grant is to compare
its coverage of only the average tuition and fees published by IHEs.44 For example, in AY2012-
2013, the maximum Pell Grant covered approximately 69% of the average published in-state
tuition and fees at four-year public institutions. At two-year public institutions, where students
often commute to classes, the maximum Pell Grant in AY2012-2013 exceeded the average
published tuition and fees at these institutions ($5,550 compared to $2,758). At for-profit
institutions, where tuition and fees are typically higher, the maximum Pell Grant covered only
41% of the average published tuition and fees in AY2012-2013. Finally, at four-year private (not-

44 Some analysts believe the purchasing power of the maximum Pell Grant could be measured by its coverage of tuition
and fees only because some students can choose to live off campus and some living expenses, which are included as
part of the student’s COA, will be incurred by the student whether or not the student chooses to attend a postsecondary
institution.
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for-profit) institutions, the maximum Pell Grant covered only 19% of the average published
tuition and fees in AY2012-2013.45
It is also important to note that in all sectors of higher education, published tuition, fees, and room
and board have consistently risen more rapidly than average prices in the economy for a number
of years. An analysis of the purchasing power of the Pell Grant maximum award as a percentage
of the COA or tuition and fees only, therefore, could also include an examination of why
published prices at institutions of higher education have risen at such a rapid rate and what is the
role of federal student aid, including Pell Grants, in rising published prices.46
Receipt of Pell Grants and Other Federal Aid
One measure of the role that the Pell Grant plays as the foundation award is the extent to which
undergraduates who received federal need-based student aid from Title IV of the HEA47 were Pell
recipients. AY2011-2012 NPSAS data suggest that Pell Grants alone may not have constituted the
primary foundation for these students. In AY2011-2012, approximately 77% of undergraduate
federal need-based aid recipients received Pell Grants, whereas a lower portion (67%) of
undergraduate need-based aid recipients borrowed Direct Subsidized Loans from the William D.
Ford Federal Direct Loan (Direct Loan) program.48
Another approach to delineating the role of Pell Grants is to explore the extent to which Pell
recipients, as a group, relied solely on the grant to meet college costs without choosing to secure
other federal aid, particularly loans with their repayment obligation. In AY2011-2012, only 32.4%
of Pell recipients relied on a Pell Grant as their only source of aid and many participated in other
federal student aid programs, sometimes at a high rate. Among the other types of federal need-
based student aid available to students, Pell recipients were most likely to also borrow Direct
Subsidized Loans (over 59.8% of Pell recipients received these loans—with an average amount of
$3,441).
Table 5 shows the average percentage of Pell Grant recipients’ cost of attendance covered by
their Pell Grant award, their loans from all sources, and their total aid package in AY2011-2012,
by total family income. This table allows one to examine the extent to which Pell Grants and
other aid helped Pell Grant recipients meet their cost of attendance.49 Table 5 shows, for example,

45 The Pell Grant maximum award’s coverage of average published tuition and fees for different types of institutions in
AY2012-2013 was calculated by CRS using the average tuition and required fees published in the 2013 (Advance
Release) Digest of Education Statistics
, Table 330.10.
46 For more information on college prices and potential explanations for escalating college prices, see CRS Report
R43692, Overview of the Relationship between Federal Student Aid and Increases in College Prices, by Adam Stoll,
David H. Bradley, and Shannon M. Mahan.
47 Federal need-based student aid from the HEA is defined here as Pell Grants, Federal Supplemental Educational
Opportunity Grants (FSEOG), Federal Perkins Loans, Federal Work-Study earnings, and Subsidized Direct Loans.
48 Further, approximately 47% of federal need-based aid recipients secured Unsubsidized Direct Loans. For more
information on Unsubsidized Direct Loans, see CRS Report R40122, Federal Student Loans Made Under the Federal
Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for
Borrowers
, by David P. Smole.
49 The cost of attendance is the sum of tuition and fees and non-tuition expenses for students who attended only one
institution. The cost is adjusted to accommodate private alternative loans that may exceed total aid (federal, state,
institutional, and private financial aid received by the student in the form of grants, loans, work-study assistance, or
other types of aid).
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that among all Pell Grant recipients, Pell Grant aid covered, on average, 23.6% of the cost of
attendance and all loan sources covered, on average, an additional 22.7% of the cost of attendance
for these recipients. For Pell Grant recipients, total aid from all sources supplies less than two-
thirds (60.2%) of the cost of attendance, on average. In addition, Table 5 illustrates that, in
general, as family income for Pell Grant recipients increases, the percentage of cost of attendance
covered by Pell Grants declines.
Table 5. Pell Grant Aid, Student Loans from All Sources, and Total Aid as Average
Percentages of Cost of Attendance for Undergraduate Students Who Received a
Pell Grant, by Total Family Income
(AY2011-2012)
Pell Grant
All Loansa as
Aid as a
a Percentage Total Aidb as
Percentage
of COA
a Percentage

of COA
of COA
All Pell Grant Recipients
23.6% 22.7% 60.2%
Total Family Income (Dependent)c



Less than $20,000
29.4% 15.9% 63.8%
$20,000 to $29,999
28.3% 14.9% 64.3%
$30,000 to $49,999
20.0% 17.7% 60.9%
$50,000 or more
12.4% 20.6% 59.5%
Total Family Income (Independent)d



Less than $20,000
24.2%
26.8%
59.7%
$20,000 to $29,999
22.5%
26.0%
56.6%
$30,000 to $49,999
22.2%
25.7%
56.1%
$50,000 or more
14.5%
30.9%
54.5%
Source: CRS estimates from 2011-2012 NPSAS.

a. All loans column includes federal loans to students, state loans, institutional loans, and other private
commercial or alternative loans. Direct PLUS loans to parents are not included. Data includes loan
amounts for Pel Grant recipients who did not borrow as wel as those who did borrow.
b. Total aid includes all federal, state, institutional, and private financial aid received by the student in the form
of grants, loans, work-study assistance, or other types of aid.
c. Includes income of dependent student and parents.
d. Includes income of independent student and spouse.
Several factors, including the overall price of education, income availability, and the choice of
institutional type, have an impact on the extent to which Pell Grant recipients secure Direct
Loans. For Pell Grant recipients attending public two-year institutions, where the average cost of
attendance is typically lower than at public four-year institutions, and particularly lower than at
private four-year institutions, the propensity for borrowing was much less than for Pell Grant
recipients as a whole. For AY2012-2013, 30% of Pell Grant recipients at public two-year
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institutions borrowed Subsidized Direct Loans, and 19% borrowed Unsubsidized Direct Loans.50
For Pell Grant recipients attending for-profit institutions, which include less-than-two-year, two-
year, and four-year institutions, the propensity to borrow was much higher. For AY2012-2013,
86% of Pell Grant recipients borrowed Subsidized Direct Loans at for-profit institutions, and 80%
borrowed Unsubsidized Direct Loans.51
Program Costs
Costs for the Pell Grant program are award year-specific and are primarily affected by the number
of students who apply for and receive aid under the program’s eligibility parameters and award
rules. From AY2008-2009 to AY2010-2011, the program experienced both anticipated and
unanticipated increases in program costs in each award year. Beginning in AY2011-2012,
program costs have declined or stabilized when compared to original estimates as a result of (1)
the changes enacted in the FY2011 Continuing Appropriations Act and the FY2012 Consolidated
Appropriations Act; and (2) declines in enrollment, particularly at private for-profit institutions.
This section reviews recent trends in program costs and also presents some of the possible causes
behind the changes in program costs since AY2007-2008.52
Current Estimates of Program Costs
Table 6 provides a summary of estimated Pell Grant program costs from AY2007-2008 through
AY2014-2015 as of April 2014. Costs associated with the discretionary base maximum award and
costs associated with the mandatory add-on award, where appropriate, are specified. Table 6
shows that the total program cost doubled from AY2007-2008 to AY2009-2010 and increased an
additional 18% in AY2010-2011. As mentioned earlier, program costs have declined since
AY2010-2011 and stabilized during the past two years, due in part to changes in enrollment
trends and recently enacted provisions by Congress.
Table 6. Estimated Pell Grant Program Costs, AY2007-2008 to AY2014-2015
(dollars in billions)
Cost Associated with
Cost Associated with
Discretionary Award
Mandatory Award
Award Year (AY)
Levels
Levels
Total Program Cost
AY2007-2008 14.7
N/A
14.7
AY2008-2009
16.1 2.3 18.4
AY2009-2010
26.8 3.2 30.0
AY2010-2011
30.6 5.1 35.7
AY2011-2012
28.8 5.0 33.8

50 To some extent, the lower rate of Direct Loan borrowing at public two-year institutions may be due to the
requirement that students be enrolled at least half-time to borrow Direct Loans since a higher percentage of students
enrolled in two-year IHEs are part-time students than students enrolled in public and private four-year IHEs.
51 CRS estimates from 2011-2012 NPSAS.
52 AY2007-2008 is used as the base year in this section since it was the last year the program was funded exclusively
with discretionary appropriations.
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Cost Associated with
Cost Associated with
Discretionary Award
Mandatory Award
Award Year (AY)
Levels
Levels
Total Program Cost
AY2012-2013
27.5 5.0 32.5
AY2013-2014
26.5 5.1 31.6
AY2014-2015
26.3 5.5 31.8
Source: Congressional Budget Office (CBO), Discretionary Baseline, Cumulative Surplus/Shortfall, and Funding Gap
of the Federal Pell Grant Program—Baseline March 2012, May 2013, and April 2014
.
Notes: N/A= not applicable. Estimates of program costs are not adjusted for inflation and are subject to change.

Program Cost Escalation: AY2008-2009 through AY2010-2011
In general, several factors contributed to the unprecedented escalation in program costs from
AY2008-2009 to AY2010-2011 that became the focus of Congress. These factors included a
combination of (1) legislative changes during these years and prior years that led to increased
benefits for more students; (2) increases in the number of students enrolling in postsecondary
education and applying for Pell Grant aid; and (3) a weakened economy. The following section
examines the details of some of the possible reasons behind increased program costs during this
time period.
Large Increase in the Discretionary Base Maximum Award
The American Recovery and Reinvestment Act (ARRA) and the FY2009 Omnibus
Appropriations Act established a $619 increase ($4,241 to $4,860) in the discretionary base
maximum Pell Grant award from AY2008-2009 to AY2009-2010, which represented the largest
one-year increase in the base maximum award in the history of the program. Prior to the
enactment of the ARRA, the largest one-year increase to the base maximum Pell Grant award was
$598, from $452 to $1,050 between AY1973-1974 and AY1974-1975.53
Funding provided by ARRA was treated as a temporary supplement to existing appropriations in
many federal programs. In the Pell Grant program, ARRA provided temporary supplemental
funding to support an increased discretionary base maximum award, but also established a de
facto floor of $4,860 for the discretionary base maximum award in future years. The Consolidated
Appropriations Act of FY2010, the FY2011 Continuing Appropriations Act, and most recently the
FY2012 Consolidated Appropriations Act also specified a discretionary base maximum award of
$4,860 for AY2010-2011, AY2011-2012, and AY2012-2013, respectively.
An increase to the discretionary base maximum award is estimated to cost, in general,54 between
$500 million and $700 million per $100 increase in a single award year. Moreover, an increase to
the discretionary base maximum award in any year may result in additional residual baseline

53 In inflation-adjusted dollars, the $598 increase between AY1973-1974 and AY1974-1975 would have represented a
substantially larger increase than the $619 increase between AY2008-2009 and AY2009-2010.
54 Estimates for the costs associated with a $100 increase to the discretionary base maximum award vary from award
year to award year because of different eligibility parameters and other technical assumptions. The range listed here is
for AY2011-2012 as of March 2010 and was provided by CBO.
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costs that must be absorbed in future years, absent a reduction to the discretionary maximum
grant or other changes to program eligibility.
Increase in FAFSA Applications and College Enrollments
According to data provided by ED, the number of students who submitted a valid application for
a Pell Grant in AY2008-2009 increased by 13.3% compared to AY2007-2008 and by 18.7%
between AY2008-2009 and AY2009-2010. In AY2010-2011, the number of valid applicants
increased 6.9% over the level observed in AY2009-2010.55
Efforts by ED and Congress to simplify the web-based version of the Free Application for Federal
Student Aid (FAFSA) during this time period may have been a factor contributing to increased
FAFSA applications.56 Additionally, the coordination between ED and the U.S. Department of
Labor to notify Unemployment Insurance (UI) beneficiaries of their potential eligibility to receive
a Pell Grant may also have contributed to increased enrollments and FAFSA applications.57 In
general, students may have been made more aware of federal financial aid as a result of efforts to
promote its availability and the overall perceived benefits of higher education. All of these
factors, when considered collectively, could have had a measurable impact on the costs of the
program.
Economic Conditions
Economic trends during this time period may also have contributed to increased Pell Grant costs.
For example, students may have chosen to enroll in college and attend at a higher intensity since
the opportunity costs of forgoing employment in a weak job market are much less. More
importantly, displaced workers may have found it necessary to return to college to gain new
technical and vocational skills to compete in the changing job market. The financial resources of
some families may have been substantially less during this time period, given higher
unemployment figures, stagnant wages, and weakened investment markets.58 Furthermore,
guidance issued by ED in April and May 2009 encouraged financial aid administrators to use
their professional judgment authority, pursuant to Section 479A of the HEA, to make adjustments,
on the basis of adequate documentation and on a case-by-case basis, to address circumstances not
reflected in the FAFSA of a recently unemployed individual.59

55 In most years prior to AY2008-2009, the annual Pell Grant applicant growth rate was typically between 2% and 8%.
CRS analysis is based on U.S. Department of Education, AY2012-13 Pell Grant End of Year Report.
56 For example, see http://www.ifap.ed.gov/eannouncements/attachments/
111909FAFSAWebPrePresentation1011.ppsx.
57 See Training and Employment Guidance Letter No. 21-08, issued by the U.S. Department of Labor on May 8, 2009,
http://wdr.doleta.gov/directives/attach/TEGL/TEGL21-08acc.pdf.
58 One recent study that demonstrates how economic trends may impact enrollment in postsecondary education for
traditional-age, first-time students was conducted by the National Student Clearinghouse Research Center and is titled
National Postsecondary Enrollment Trends: Before, During, and After the Great Recession, July 2011. Available at
http://www.studentclearinghouse.info/signature/1/NSC_Signature_Report_1.pdf
59 See Dear Colleague Letters GEN-09-04 and GEN-09-05 at http://ifap.ed.gov/dpcletters/attachments/GEN0904.pdf
and http://ifap.ed.gov/dpcletters/attachments/GEN0905.pdf, respectively.
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Legislative Changes to the Federal Need Analysis Calculation and
Award Rules

Legislative changes to the federal need analysis calculation and Pell Grant award rules enacted
prior to the FY2011 Continuing Appropriations Act, for the most part, benefited students and
expanded eligibility for the Pell Grant program. Typically, when changes to the federal need
analysis calculation and program award rules are enacted under authorizing or budget
reconciliation legislation, the additional discretionary costs in the program are paid for in
subsequent annual appropriations.
The award rule allowing “year-round” Pell Grants had a significant impact on program costs, in
part due to the regulatory interpretation of the provision, as well as unanticipated participation
(see the previous section entitled “Year-Round Pell Grants”). Regulatory interpretation required
that the cross-over payment period60 be assigned to the award year that would produce the higher
Pell Grant payment amount, allowed payment of up to 200% of the scheduled award for the
award year, and defined eligible individuals as those exceeding 24 credit hours (cumulatively)
during the three or more terms in the award year rather than limiting eligibility to those exceeding
30 credit hours in the award year.
Some of the legislative changes to the need analysis calculation enacted prior to the FY2011
Continuing Appropriations Act that resulted in higher discretionary costs include, but are not
limited to, (1) expansion of the automatic zero EFC qualification in both the Higher Education
Reconciliation Act of 2005 (HERA) and CCRAA; (2) the increase in the income protection
allowance levels for all students in the HERA and the CCRAA; (3) the elimination of certain
untaxed income and benefits in the CCRAA; and (4) a variety of exclusions and benefits
regarding the treatment of veterans education benefits, and military benefits and allowances
enacted under the HEOA.61
Program Cost Decline: Post AY2010-2011
Several factors have contributed to the reduction in Pell Grant program costs since AY2010-2011.
The factors include, but are not limited to,
• levelling of the discretionary base maximum award since AY2009-2010 (see
Table 1);
• levelling of the mandatory add-on award from AY2010-2011 to AY2012-2013
(see the previous section entitled “Mandatory “Add-On” Award”);
• raising the qualifying minimum award beginning in AY2012-2013 (see the
previous section entitled “Qualifying Minimum Award”);
• reducing the income threshold for an automatic zero beginning in AY2012-2013
(see the previous section entitled “Automatic Zero EFC”);

60 A “cross-over payment period” is a payment period that falls into two award years—beginning before July 1 and
ending on or after July 1.
61 The Higher Education Reconciliation Act of 2005 (HERA) was enacted as Title VIII-A of the Deficit Reduction Act
of 2005 (P.L. 109-171).
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• eliminating “year-round” Pell Grants beginning in AY2011-2012;
• reducing the cumulative lifetime eligibility for Pell Grant aid from 18 semesters
to 12 semesters beginning in AY2012-2013;
• eliminating the ability to benefit eligibility allowance beginning in AY2012-2013;
• declining undergraduate enrollment since AY2010-2011;
For AY2012-2013 and future years, the cumulative lifetime eligibility for Pell Grant aid is
reduced from 18 semesters to 12 semesters. Eligibility is based on the current full-time-equivalent
basis.62 Any Pell Grant aid received prior to July 1, 2012, will count towards a student’s lifetime
limit.
Prior to AY2012-2013, qualifying students could demonstrate an ability to benefit from
postsecondary education to be eligible for Pell Grant aid. To qualify, students who did not have a
high school diploma or recognized equivalent or who did not complete a secondary education in a
qualified home setting could pass an examination approved by ED to be eligible for federal
student aid or could successfully complete six credits or 225 clock hours of college work
applicable to a certificate or degree offered by a postsecondary institution.
Total undergraduate fall enrollment in degree-granting postsecondary institutions has steadily
declined from a high of 18.1 million in AY2010-2011 to 17.7 million in AY2012-2013.63 The
declining undergraduate enrollment is reflected in a reduction of Pell Grant recipients from 9.4
million in AY2011-2012 to 9.0 million in AY2012-2013 (Table 2).
Program Funding
This section reviews the latest program funding trends. Although the program is currently
operating with a surplus, addressing periodic funding shortfalls contributes significantly to
changes regarding eligibility and award rules, and to appropriations decisions. This section
explores the concepts of and provides a historic look at discretionary funding surpluses and
shortfalls in the program. Additionally, this section provides insight into how funding shortfalls in
the program have been addressed in the past.
Role of Discretionary Funding
Annual discretionary appropriation bills provide the largest portion of funding for the Pell Grant
program, and this funding typically remains available for use for two fiscal years. An annual
appropriation is usually available for obligation on October 1 of the fiscal year in which the
appropriation is made and remains available for obligation through September 30 of the following

62 For example, students who consistently enroll part-time in standard terms throughout their progression to a
bachelor’s degree could receive Pell Grant aid for 24 semesters, or 12 years. Students who consistently enroll full-time
in standard terms throughout their degree progression to a bachelor’s degree could receive Pell Grant aid for 12
semesters, or six years. This change does not affect the measurement of full-time enrollment for the purposes of federal
student aid, which is currently 12 semester hours (or the equivalent for non-standard terms).
63 National Center for Education Statistics (NCES), 2013 Advance Release Selected Tables of the Digest of Education
Statistics
, Table 330.70.
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fiscal year.64 Thus, while FY2015 funds are provided with the purpose of supporting awards made
from July 1, 2015, to June 30, 2016, these funds are available for obligation from October 1,
2014, to September 30, 2016, and may support multiple award years. As mentioned earlier,
annual discretionary appropriation bills also establish the base discretionary maximum grant for
each applicable award year.
Increasing Role of Mandatory Funding
Specified Mandatory Appropriations to Augment Discretionary Funding
The SAFRA Act, the FY2011 Continuing Appropriations Act, the Budget Control Act of FY2011,
and most recently the FY2012 Consolidated Appropriations Act amended the HEA to provide
specified mandatory appropriations for the Pell Grant program to augment current and future
discretionary appropriations. That is, these funds, while mandatory from a budgetary perspective,
can be used to pay for costs in the program for which annual discretionary appropriations are
typically provided. The concept of providing advance mandatory funding to augment or supplant
discretionary funding in the program is relatively new. Prior to the CCRAA, mandatory funding
had been infrequently provided for the Pell Grant program, but usually to supplement
discretionary funding to pay for accumulated funding shortfalls.65
From a budgetary perspective, these recent increases in mandatory appropriations have been
offset largely by enacted provisions that have resulted in estimated savings from the federal
student loan programs, which are classified as mandatory programs. Additionally, some of the
mandatory appropriations provided for the program in the FY2011 Continuing Appropriations Act
and FY2012 Consolidated Appropriations Act were offset by enacted provisions that resulted in
mandatory savings in the Pell Grant program.66
Indefinite Mandatory Appropriations for the Add-On Award
The SAFRA Act also established indefinite mandatory appropriations for the program to provide
for increases to the discretionary base maximum award amount in FY2010 and beyond. That is,
mandatory appropriations are available to fund add-on award amounts indefinitely for “such sums
as necessary,” but the specific amount provided for each year will be determined based on costs
associated with the add-on amount specified in the SAFRA Act. For FY2013 through FY2017,
the amount of the mandatory add-on award is, in part, contingent on the amount of the
discretionary base maximum award. In general, if the discretionary base maximum award
increases above $4,860 in future years, add-on amounts will also increase, along with the amount

64 The annual appropriation for the Pell Grant program is available immediately upon enactment at any point on or after
October 1. In the event the annual appropriation is not enacted at the beginning of the fiscal year, a continuing
resolution typically provides prorated funding for the program until an appropriation measure is enacted.
65 For example, mandatory funding in the amount of $4.3 billion was provided in P.L. 109-149 to pay exclusively for
the accumulated funding shortfall through AY2005-2006.
66 Since the enactment of the SAFRA Act, legislative changes that affect the eligibility and award rules of the Pell
Grant program are measured separately on the budget ledger between discretionary and mandatory funding. That is, a
distinction is made between savings or additional costs associated with funding the discretionary base maximum award
and the mandatory add-on award when changes to the program are enacted. For example, eliminating eligibility for a
student to receive two scheduled Pell Grant awards in one award year would result in savings associated with both the
discretionary base maximum award and the mandatory add-on award. In general, savings associated with the
mandatory award can be redirected back to the program as specified mandatory appropriations for future use.
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of required mandatory appropriations. In contrast, the amount of required mandatory
appropriations would decrease if the discretionary base maximum award falls below the level of
$4,860.
Prior to the SAFRA Act, the CCRAA provided annual specified mandatory appropriation levels
from FY2008 to FY2017 to fund annual add-on award amounts. That is, specific funding amounts
were provided to pay for estimated costs associated with specified add-on award amounts. The
CCRAA also required the Secretary of Education to reduce or increase the add-on amounts for
any year the specified mandatory level was insufficient or exceeded the expected cost of the add-
on amount. This requirement was included to ensure that the costs associated with the mandatory
add-on would align with the appropriated amounts in the HEA.67 The SAFRA Act eliminated the
specified mandatory appropriation levels for FY2010 and all subsequent years and replaced these
levels with indefinite mandatory appropriations, while revising the add-on award amounts.
Summary of Recent and Projected Funding (FY2008-FY2021)
An appropriate timeline for summarizing recent funding increases could commence with FY2008,
since it marks the first year in which significant mandatory funding was provided for the program
under the CCRAA.68 Table 7 provides a history of funding for the program from FY2008 to
FY2014. A distinction is made between discretionary appropriations, mandatory appropriations
provided to augment discretionary appropriations, and mandatory appropriations provided to fund
the add-on award amounts specified in the SAFRA Act. Table 7 also displays the mandatory
appropriations that have been provided through FY2021. Mandatory appropriations that will be
necessary to fully fund the add-on award amount are available indefinitely, but the specific
amount required in each year cannot be reported until the add-on amount is determined and all
funds are disbursed to eligible students.


67 Several issues surfaced regarding this requirement, including the ability and timing of ED to accurately measure such
insufficiency or surplus of funds given the operational and administrative requirements under other provisions in the
HEA.
68 Table 8 in this report provides a more comprehensive history of the discretionary funding levels in the program since
FY1973.
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Table 7. Pell Grant Funding (FY2008 to FY2021)
(dollars in millions)
Fiscal Yeara FY2008
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021
Legislation














Discretionary Appropriations
Annual
Appropriations
$14,215 $17,288 $17,495 $22,956 $22,824 $22,778 $22,778
TBD
TBD
TBD
TBD
TBD
TBD
TBD

ARRA

$
15,640












Total Discretionary
$14,215 $32,928 $17,495 $22,956 $22,824 $22,778 $22,778
TBD TBD
TBD
TBD
TBD
TBD
TBD
Mandatory Appropriations Provided to Augment Discretionary Appropriations
SAFRA Act

$13,500 —









FY2011 Continuing
Appropriations Act

$3,183
$0
$0
$0
$0
$1,060 $1,125 $1,125 $1,140 $1,145
Budget Control Act of 2011

$10,000 $7,000








FY2012 Consolidated
Appropriations Act

$612 $587 $588 $0 $0
$514 $257 $284 $290 $0
Total Mandatory to
Augment

Discretionary


$13,500 $13,795 $7,587 $588
$0
$0 $1,574 $1,382 $1,409 $1,430 $1,145b
Mandatory Appropriations Provided to Fund Add-On Award Amounts
CCRAAc $2,041d
$2,090












ARRA

$643












SAFRA Act

$5,300e
$5,560f
$4,950g $4,854h $5,579i
SSAN SSAN
SSAN
SSAN
SSAN
SSAN
SSAN
Total Mandatory for Add-
On Awards

$2,041 $2,733
$5,300
$5,560
$4,950
$4,854
$5,579
SSAN SSAN
SSAN
SSAN
SSAN
SSAN
SSAN
Total Pell Grant Funding (Discretionary and Mandatory)
Total Funding
$16,256 $35,661 $22,795 $42,016 $41,569 $35,219 $28,945
TBD
TBD
TBD
TBD
TBD
TBD
TBD
Source: CRS analysis of the HEA, as amended, President’s FY2015 Budget, and respective appropriations measures.
Notes: TBD=to be determined; “—“ means that no appropriations were provided beyond the initial year(s) specified.
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SSAN=Such sums as necessary. In effect, this means the amount of mandatory appropriations that will be necessary to fully fund the add-on award amount specified in the
HEA for a given year. In other words, mandatory funding has been available to support the add-on amount beginning in FY2010 onward indefinitely, but the specific amount
required in each year cannot be reported until the add-on amount is determined and al funds are disbursed to eligible students.
a. The fiscal year in this table represents the first year the funds appropriated in each column are available for use. Most funds are available for two fiscal years.
b. Additional annual mandatory appropriations in the amount of $1,145,000,000 are also provided for each succeeding year beyond FY2021 per the FY2011 Continuing
Appropriations Act.
c. Some of the advance appropriations provided in the CCRAA for the program were subsequently rescinded in the SAFRA Act and are not shown on this table. See
Table A-3 for a history of mandatory appropriations before the enactment of the SAFRA Act.
d. Includes $11 million for the elimination of the tuition sensitivity rule in AY2007-2008.
e. This is the amount of mandatory appropriations required to increase the discretionary base maximum grant by $690 in AY2010-2011, as estimated in the President’s
FY2015 Budget.
f.
This is the amount of mandatory appropriations required to increase the discretionary base maximum grant by $690 in AY2011-2012, as estimated in the President’s
FY2015 Budget.
g. This is the amount of mandatory appropriations required to increase the discretionary base maximum grant by $690 in AY2012-2013, as estimated in the President’s
FY2015 Budget.
h. This is the amount of mandatory appropriations required to increase the discretionary base maximum grant by $785 in AY2013-2014, as estimated in the President’s
FY2015 Budget.
i.
This is the amount of mandatory appropriations required to increase the discretionary base maximum grant by $870 in AY2014-2015, as estimated in the President’s
FY2015 Budget.

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Discretionary Funding Shortfalls and Surpluses
The annual discretionary appropriation level and base maximum Pell Grant level are determined
in advance of the award year they are intended to support, and are based on estimates of program
costs at that time. The annual appropriation is determined on the basis of estimates of the program
costs that are likely to be incurred at the chosen discretionary base maximum award level. To the
extent those estimates of future program costs are inaccurate, the annual appropriation may be too
much or too little. The HEA requires the Secretary of Education, when he has determined that the
appropriated funds are insufficient to satisfy all Pell entitlements,69 to notify each chamber of
Congress of the funding shortfall, identifying how much more funding is needed to meet those
entitlements.
Table 8 provides a history of annual discretionary appropriations, estimated expenditures, and
estimated annual shortfall or surplus levels from FY1973 to FY2014. Beginning with FY1990,
the estimated cumulative funding shortfall or surplus is also provided. The annual funding
shortfall or surplus differs from the cumulative shortfall or surplus, which may accumulate over
multiple award years.70 It is also important to note that Congress may have provided a reduced
appropriation level in a given year when a funding surplus was available for use from the
previous year. Conversely, Congress may have provided additional appropriations in a given year
to pay for an estimated funding shortfall from the previous year.
Table 8. Annual and Cumulative Discretionary Funding Shortfalls in
the Pell Grant Program, FY1973-FY2014
(dollars in millions)
Discretionary
Estimated
Cumulative
Appropriation
Total
Annual Surplus Surplus or
Fiscal Year
Award Year
Level
Expendituresa or (Shortfall)b
(Shortfall)
1973 1973-1974
$122
$48
$74
N/A
1974
1974-1975
$475 $358 $117 N/A
1975
1975-1976
$840 $926 ($86) N/A
1976 1976-1977
$1,326 $1,475 ($149)
N/A
1977 1977-1978
$1,904 $1,524
$380
N/A
1978 1978-1979
$2,160 $1,541
$619
N/A
1979 1979-1980
$2,431 $2,357
$74
N/A
1980 1980-1981
$2,157 $2,387 ($230)
N/A
1981 1981-1982
$2,604 $2,300
$304
N/A

69 The authorizing statue speaks of entitlements when it describes the award determined for a student based on the
published award schedule.
70 In general, the annual surplus or shortfall is a measure of the difference between one year’s appropriation, which is
typically provided for a particular award year, and the estimated expenditures for that particular award year. The
cumulative surplus is a measure that, in addition to including the annual surplus or shortfall, takes into account the prior
year’s surplus or shortfall amount.
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Discretionary
Estimated
Cumulative
Appropriation
Total
Annual Surplus Surplus or
Fiscal Year
Award Year
Level
Expendituresa or (Shortfall)b
(Shortfall)
1982 1982-1983
$2,419 $2,421
($2)
N/A
1983 1983-1984
$2,419 $2,797 ($378)
N/A
1984 1984-1985
$2,800 $3,053 ($253)
N/A
1985 1985-1986
$3,862 $3,597
$265
N/A
1986 1986-1987
$3,580 $3,460
$120
N/A
1987 1987-1988
$4,187 $3,754
$433
N/A
1988 1988-1989
$4,260 $4,476 ($216)
N/A
1989 1989-1990
$4,484 $4,770
($75) ($75)
1990 1990-1991
$4,804 $4,904 ($231) ($306)
1991 1991-1992
$5,376 $5,772 ($396) ($702)
1992 1992-1993
$5,503 $6,156
$18 ($684)
1993 1993-1994
$6,462 $5,621
$460 ($224)
1994 1994-1995
$6,637 $5,504
$808
$584
1995 1995-1996
$6,147 $5,466
$716 $1,300
1996 1996-1997
$4,914 $5,784 ($870)
$429
1997 1997-1998
$5,919 $6,315 ($396)
$33
1998 1998-1999
$7,345 $7,236
$109
$142
1999 1999-2000
$7,704 $7,233
$471
$613
2000 2000-2001
$7,640 $7,996 ($356)
$256
2001 2001-2002
$8,756 $9,985 ($1,229) ($908)
2002 2002-2003
$11,314c
$11,653 ($339)
($1,247)
2003 2003-2004
$11,365 $12,713 ($1,348) ($2,595)
2004 2004-2005
$12,007 $13,152 ($1,145) ($3,740)
2005 2005-2006
$12,365 $12,695 ($330) ($4,070)
2006 2006-2007
$17,345d
$12,825
$4,520 $220
2007 2007-2008
$13,661 $14,699
($1,038) ($818)
2008 2008-2009
$14,215 $16,055
($1,840) ($2,658)
2009 2009-2010
$32,928e
$26,847
$6,081 $3,423
2010 2010-2011
$17,495 $30,556
($13,061) ($9,638)
2011 2011-2012
$36,456f
$28,808
$7,648 ($1,990)
2012 2012-2013
$36,619g
$27,543
$9,076 $7,086
2013 2013-2014
$30,365h
$26,456
$3,909 $10,995
2014 2014-2015
$23,366i
$26,269
($2,903) $8,092
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Sources: (1) U.S. Department of Education (ED), AY2010-11 Federal Pell Grant Program End-of-Year Report; (2)
unpublished data provided by ED; and (3) data provided by CBO in May 2013.
Notes: N/A= not available. Data on the cumulative shortfal or surplus prior to AY1989-1990 could not be
verified and therefore are not provided. Prior to 1980, the program was cal ed the Basic Educational
Opportunity Grant (BEOG) Program.
a. The estimated total expenditure totals for AY1973-1974 through AY1988-1989 are taken from the U.S.
Department of Education, AY2009-10 Federal Pell Grant Program End-of-Year Report and do not include
administrative cost al owance payments to institutions. The expenditure totals for AY1989-1990 to
AY2005-2006 are taken from unpublished data provided by ED and reflect administrative cost al owance
payments to institutions. Estimates of al data after AY2005-2006 are provided by CBO and also include
administrative cost allowance payments to institutions. All estimates of expenditures are subject to change.
b. The annual shortfall or surplus amount reflects account transfers and other adjustments and may not equal
the difference between the annual appropriation and estimated total expenditures in each year.
c. Includes $1 billion in supplemental discretionary funding to pay for the FY2001 cumulative shortfall.
d. Includes $4.3 billion in mandatory funding provided in FY2006 to exclusively supplement the discretionary
funding necessary to retire the cumulative funding shortfal through AY2005-2006, as original y estimated in
the President’s FY2006 Budget. The mandatory funds that exceeded the actual cumulative funding shortfall
were returned to the U.S. Department of the Treasury. The discretionary appropriation for FY2006 was
$13,045 million.
e. Includes approximately $15.7 billion in supplemental discretionary appropriations provided in the ARRA.
f.
Includes $13.5 billion in mandatory appropriations that were provided in the SAFRA Act for general use in
the program through FY2012 and $22,956 million in discretionary appropriations provided in the FY2011
Continuing Appropriations Act.
g. This number includes mandatory and discretionary funding from the fol owing sources: The FY2011
Continuing Appropriations Act provided $3,183 million in mandatory appropriations for general use in the
program for FY2012. The Budget Control Act of 2011(P.L. 112-25) provided $10 billion in mandatory
appropriations for general use in the program for FY2012. Final y, the FY2012 Consolidated Appropriations
Act (P.L. 112-74) provided $22,824 million in discretionary appropriations for FY2012 and $612 million in
mandatory appropriations for general use in the program for FY2012.
h. This number includes mandatory and discretionary funding from the fol owing sources: The Budget Control
Act of 2011(P.L. 112-25) provided $7 billion in mandatory appropriations for general use in the program for
FY2013. Additional y, the FY2012 Consolidated Appropriations Act (P.L. 112-74) provided $587 mil ion in
mandatory appropriations for general use in the program for FY2013.
i.
This number includes mandatory and discretionary funding from the fol owing sources: The FY2012
Consolidated Appropriations Act (P.L. 112-74) provided $588 million in mandatory appropriations for
general use in the program for FY2014. The Consolidated Appropriations Act, 2014 (P.L. 113-76) provided
$22,778 million in discretionary appropriations for FY2014.
Measures to Address Funding Shortfalls
Over the years, federal policymakers and Congress have taken a variety of measures to address
the vexing issues associated with funding shortfalls in the Pell Grant program. Funding shortfalls
in the Pell Grant program have, on infrequent occasions in the past, led to reductions in students’
awards, recipient caps, the need for supplemental appropriations, or to stagnating award levels
from award year to award year.
For the most part, funding shortfalls in the program have been accepted as common occurrences,
but the measures employed to deal with them have varied. The relative size of the estimated
funding shortfall in any given year is of particular interest to Congress, officials at ED, and
student aid advocacy groups.
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It is important to note that the Pell Grant program is often referred to as a “quasi-entitlement” and
has for the most part been operated as an appropriated entitlement given the infrequency of
reductions in students’ awards or imposed recipient caps since the 1990s. Most recent funding
shortfalls in the Pell Grant program have not directly impacted eligible students’ awards. This
section provides a brief chronological history of the measures adopted to address funding
shortfalls in the program.
Pre-2002
From the inception of the program in 1972 until the enactment of the Higher Education
Amendments of 1992 (P.L. 102-325), the Secretary of Education had statutory authority under the
HEA to reduce awards to respond to a shortfall in appropriated funds.71 Reductions were made in
awards in eight years using this authority (the last in AY1990-1991). After this HEA authority
was repealed, appropriations legislation for FY1994-FY2001 continued to provide the Secretary
with reduction authority, but that authority was not used.72 FY2002 and subsequent appropriations
legislation have not included such language.
The Secretary can respond to a shortfall in Pell Grant funding by allocating funds from the most
recently enacted appropriation to pay for obligations incurred in previous award years.73 This
permits ED to use funds from multiple fiscal years’ appropriations to meet one award year’s cost.
Funding Shortfalls from FY2002 to FY2006
During the period between FY2002 and FY2006, a very large funding shortfall accumulated,
culminating at $4.1 billion in AY2005-2006—approximately equivalent to one-third of the
AY2005-2006 program expenditure. In short, the funding shortfall was a result of unexpected and
significant growth in the number of Pell Grant applicants, driven primarily by a weakened
economy, and a sustained misalignment between program cost estimates and annual
appropriations. The accumulated shortfalls during this time period, however, did not result in a
reduction of awards for any eligible student. The maximum grant level, on the other hand,
remained stagnant at $4,050 from AY2003-2004 through AY2006-2007.

71 Some form of authority to reduce awards was available to the Secretary between the inception of the program in
1972 and the 1992 amendments. Immediately prior to its repeal in 1992, the HEA provision permitted reduction in
awards only within certain limits. No award could be reduced for students whose expected family contribution (EFC)
was $200 or less (i.e., the awards for the neediest students would be protected). A schedule of reductions for other
awards had to use a “single linear reduction formula” that applied uniformly. No award could be made to a student
whose initial award was reduced to less than $100 under the reduction formula. The original language creating the
Basic Educational Opportunity Grants (BEOG), the predecessor to Pell Grants, in the Education Amendments of 1972
allowed for payments on a pro rata reduced basis and specified a minimum grant of $50 whenever the program was less
than fully funded.
72 The appropriations legislation during this time period required the Secretary to reduce awards using fixed or variable
percentages, or using a fixed dollar reduction, if, prior to issuing the payment schedules, he or she determined that
appropriated funds could not fully fund the appropriated maximum grant. A schedule of reduced grants would then be
published.
73 This response to the shortfall is only feasible if ED determines enough funds are available from the most recently
enacted appropriation to meet obligations from multiple award years. A series of legal opinions at ED and other
agencies in the 1990s provides the basis for the authority to use funds in an annual appropriation for multiple award
years. In general, absent specific language in an annual appropriations measure limiting funds to a specific award year
or purpose, the Secretary may use such funds for any award year during the period of availability specified in an
appropriations measure.
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Congress responded to the accumulated shortfall in FY2006 by providing $4.3 billion in
mandatory appropriations to eliminate the shortfall that had accumulated through AY2005-2006.
These mandatory funds were appropriated in the FY2006 appropriations legislation for Labor,
Health and Human Services, and Education (P.L. 109-149). Refer to Table 8 for more
information on the annual funding and expenditure levels that led to the $4.1 billion shortfall at
the end of AY2005-2006.
Adoption of FY2006 CBO Scoring Rule
In addition to eliminating the AY2005-2006 funding shortfall, Congress took steps in FY2006 to
limit the possibility of large accumulated funding shortfalls in the future. H.Con.Res. 95
established a permanent rule that applies to the scoring74 of the Pell Grant program by the
Congressional Budget Office (CBO). The rule provides that if the appropriations of new
discretionary budget authority75 enacted for the program are insufficient to cover the full costs in
the upcoming year—including any funding surplus or shortfall from prior years—the budget
authority counted against the bill for the program will be equal to the adjusted full cost (i.e., total
need). The rule also states that the budget authority for the program will be based on the
maximum appropriated award amount and any changes to the eligibility criteria.
Prior to the implementation of the FY2006 scoring rule, CBO accounted for budget authority in
the Pell Grant program according to the level provided in each appropriation bill. While this
approach is typical for most discretionary programs, the Pell Grant program is unique since it
operates like an entitlement program and annual appropriations can be used to fund multiple
award years. Prior to the adoption of the scoring rule, Congress could choose to fund new
programs or increase the funding of existing programs subject to discretionary appropriations
while providing less funding than required for the Pell Grant program. While the scoring rule
cannot fully account for the challenges of estimating the cost of the program, it does constrain the
accumulation of the funding shortfall by requiring Congress to annually reconcile previous years’
appropriation levels with updated estimates of previous years’ program obligations.
Funding Shortfalls and Surpluses (Post-Scoring Rule to FY2010)
During the period from FY2006 to FY2010, the program experienced a mix of accumulated
funding shortfalls and surpluses. From FY2006 to FY2008, CBO estimates that the program’s
cumulative funding shortfall culminated at $2.7 billion.76 In FY2009, ARRA and the FY2009
Omnibus Appropriations Act (P.L. 111-8) provided a combined discretionary funding level of
$32.9 billion. These funds were used to
• retire the accumulated $2.7 billion funding shortfall in FY2008;77

74 CBO “keeps score” for Congress by monitoring the results of congressional action on individual authorization,
appropriation, and revenue bills against budget authority and outlay targets that are specified in the concurrent
resolutions.
75 Budget authority is defined as the broad responsibility conferred by Congress that empowers government agencies to
spend federal funds.
76 This estimate is current as of April 2011 and includes an annual funding surplus in FY2006 of $219 million.
77 This estimate would have been lower at the time ARRA was enacted in January 2009.
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• increase the discretionary base maximum award by $619 to $4,860 in
AY2009-2010; and
• provide for a surplus of funds totaling $3.4 billion78 available for use
through FY2011.79
In December 2009, the Consolidated Appropriations Act of FY2010 (P.L. 111-117) provided
$17.5 billion in discretionary funds based on estimates of program costs for AY2010-2011 and the
funding surplus in FY2009 as of March 2009. Between March 2009 and March 2010, however,
the number of students applying for a Pell Grant in AY2009-2010 increased beyond historic
trends as overall economic conditions continued to weaken and college enrollments increased. In
March 2010, CBO published revised estimates of the program costs for AY2009-2010 and
AY2010-2011, which incorporated the new economic trends and application growth not captured
in the previous year’s estimates. Revised estimates released by CBO in March 2011 showed a
cumulative funding shortfall of $10.7 billion through the end of FY2010.
In response to this funding shortfall, the SAFRA Act provided $13.5 billion in advance mandatory
appropriations for general use in the program that were made available October 1, 2010, through
September 30, 2012. These mandatory appropriations were offset by changes in federal student
loan programs and effectively eliminated the estimated $10.7 billion discretionary funding
shortfall and created a funding surplus available in FY2011 to augment discretionary funding
needs.
Responding to Additional Funding Needs: FY2011
Although additional mandatory funds were provided in the SAFRA Act for use in FY2011 to pay
for the FY2010 funding shortfall and augment FY2011 discretionary funding needs, Congress
was required to consider a significant “funding gap”80 between the previous year’s discretionary
funding level in FY2010 of $17.5 billion and the amount needed in FY2011 to maintain the

78 The estimated surplus resulting from ARRA and the FY2009 Omnibus Appropriations Act was estimated by CBO to
be substantially higher at the time of enactment of these bills in January 2009 and March 2009, respectively. Since
students did not begin applying for a Pell Grant in AY2009-2010 until early January 2009, the substantial growth in the
number of applicants was not captured until after these spending measures were enacted.
79 ARRA provided $15.6 billion in discretionary appropriations for use through the end of FY2011. House Conf.
Report 111-004, which accompanied ARRA, states that $15.6 billion was provided for a $500 increase in the
discretionary base maximum award for two years, but does not indicate the assumed base levels to which the $500
increase would be added. In effect, by extending the period of availability of funds to the end of FY2011, ARRA
created a surplus of funds that would offset the costs of maintaining a $4,860 discretionary base award in AY2010-
2011. The Explanatory Statement in the Congressional Record of February 23, 2009, which was issued in lieu of a
conference report for the FY2009 Omnibus Appropriations Act, states that, combined with the funds provided in
ARRA, the funds provided in the FY2009 Omnibus Appropriations Act will increase the discretionary maximum grant
by $619 in AY2009-2010.
80 The terms “funding gap” and “funding shortfall” are not synonymous. The term “funding gap” is used here to
describe the amount of additional discretionary funding required above the previous year’s funding level in order to
fund the program at current levels. The term “funding shortfall” describes the amount of additional funding required to
meet the program’s obligations in an award year for which Congress has already provided funding based on program
estimates for specified maximum and minimum grant levels and eligibility parameters. The program experienced
significant discretionary funding gaps in recent years primarily due to a sustained misalignment between the program’s
cost and budget authority level. This misalignment has continued due to (1) restrictions on the available discretionary
budget authority allocation within the overall Labor, HHS, and ED appropriation; and (2) mandatory funding provided
to augment discretionary funding, which is not reflected in the subsequent years’ baseline estimates for discretionary
budget authority.
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FY2010 award and eligibility parameters in FY2011. Moreover, Congress recognized the
implications of a continued funding gap in discretionary appropriations for the subsequent
FY2012 and took steps to address these needs in FY2011. To address these concerns, Congress
took the following steps:
• In April 2011, the FY2011 Continuing Appropriations Act provided
approximately $23 billion in discretionary appropriations for FY2011. In
addition, a total of $8.8 billion in mandatory appropriations were
provided for general use in the program beginning in FY2012 through
FY2021,81 of which $3.2 billion was made available for use beginning in
FY2012. These appropriations were offset by estimated mandatory
savings from the elimination of a provision that allowed for two
scheduled Pell Grants in one award year.82
• In August 2011, the Budget Control Act of 2011 provided an additional
$10 billion in mandatory appropriations for general use in the program
beginning in FY2012 and an additional $7 billion in mandatory
appropriations for general use in the program beginning in FY2013.
These appropriations were offset with estimated mandatory savings from
the elimination of provisions in the William D. Ford Direct Loan (DL)
program.83
The additional mandatory funding provided above, when combined with the additional funds
provided in the SAFRA Act in FY2010 for use in FY2011, resulted in an estimated $7.4 billion
surplus of mandatory funds that could be used in FY2012 to augment discretionary funding
needs.
FY2012 Appropriations
Despite the availability of approximately $7.4 billion in mandatory appropriations to augment
discretionary funding in FY2012, Congress was required to consider an approximately $1.3
billion funding gap in FY2012. Congress responded to this $1.3 billion funding gap by amending
the HEA to make changes to federal student aid programs and redirecting most of the available
savings from these changes to the Pell Grant program in FY2012 and future years. Changes
enacted in the FY2012 Consolidated Appropriations Act that affect the Pell Grant program are
discussed below.
In December 2011, the FY2012 Consolidated Appropriations Act provided $22.8 billion in
discretionary funding for the program for FY2012. The discretionary base maximum award for

81 Additional annual mandatory appropriations in the amount of $1,145,000,000 would also be provided in each
succeeding year beyond FY2021 under the FY2011 Continuing Appropriations Act.
82 Provisions included in appropriations acts that affect mandatory spending programs are commonly called “changes
in mandatory program spending,” or CHIMPS. CHIMPS may reduce or increase mandatory outlays in the current fiscal
year or future fiscal years. CHIMPS are used more frequently in other federal programs, such as certain agricultural
programs. For more information, see CRS Report R41245, Reductions in Mandatory Agriculture Program Spending,
by Jim Monke and Megan Stubbs.
83 For more information on the Budget Control Act of 2011, see CRS Report R41965, The Budget Control Act of 2011,
by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan.
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AY2012-2013 was $4,860, and the total maximum award for which a student was eligible in
AY2012-2013 was $5,550. These amounts were unchanged from the previous award year.
The FY2012 Consolidated Appropriations Act also provided an additional $3.1 billion in
mandatory funding for general use in the program from FY2012 to FY2021, of which $612
million was available beginning in FY2012. These mandatory funds were offset by the estimated
mandatory savings from policy riders also included in FY2012 Consolidated Appropriations Act
that made changes to federal student aid programs in the HEA.84 Changes that were specific to the
eligibility criteria and award rules for the Pell Grant program included the following:
• For AY2012-2013 and future years, the qualifying minimum Pell Grant
award was set to 10% of the total maximum Pell Grant.
• For AY2012-2013 and future years, the cumulative lifetime eligibility for
Pell Grant aid was reduced from 18 semesters to 12 semesters.
The following change affected eligibility for need-based federal student aid (e.g., Pell Grants,
Subsidized Direct Loans, etc.):
• For AY2012-2013, the income threshold85 for determining whether
certain students are eligible to receive an automatic zero expected family
contribution (EFC) changed from $31,000 to $23,000. Income threshold
levels for future years will be indexed to inflation.
The following change affected eligibility for most federal student aid programs under Title IV of
the HEA:86
• Students will no longer be able to qualify for federal student aid on the
basis of passing an ability-to-benefit test or completing six credit hours
of postsecondary work.87 Only students who have a high school diploma,
or the recognized equivalent, as well as students who complete a
secondary education in a qualified home setting, are eligible for federal
student aid. Only students who first enroll on or after July 1, 2012, are
affected by this change.


84 For more details on the changes included in P.L. 112-74 that affect the federal student loan programs, see CRS
Report R40122, Federal Student Loans Made Under the Federal Family Education Loan Program and the William D.
Ford Federal Direct Loan Program: Terms and Conditions for Borrowers
, by David P. Smole.
85 For tax filers, this threshold is based on the adjusted gross income (AGI) amount. For non-tax-filers, the threshold is
based on earned income. Note that only certain students are eligible to receive an automatic zero EFC and additional
requirements other than the income threshold must be met.
86 Eligibility for the following currently funded federal student aid programs under Title IV of the HEA will be affected
by this change: Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Work-Study
earnings, the William D. Ford Federal Direct Loan Program, and the Federal Perkins Loan Program.
87 A CRS analysis of data from the National Postsecondary Student Aid Survey (NPSAS) shows that approximately
.8% of all Pell Grant recipients in AY2007-08 passed an ability-to-benefit test.
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Appendix A. Tables on Selected Pell Grant
Information Prior to the Enactment of the
SAFRA Act

Table A-1. Authorized Maximum Pell Grant Award Amounts (Pre-SAFRA Act),
AY2008-2009 Through AY2017-2018
Fiscal Year
Award Year
Authorized Maximum Award
FY2008 AY2008-2009 $5,800a
FY2009 AY2009-2010 $6,000
FY2010 AY2010-2011 $6,400
FY2011 AY2011-2012 $6,800
FY2012 AY2012-2013 $7,200
FY2013 AY2013-2014 $7,600
FY2014 AY2014-2015 $8,000
FY2015 AY2015-2016
NA
FY2016 AY2016-2017
NA
FY2017 AY2017-2018
NA
Source: HEA.
Notes: “NA” means not applicable.
a. Prior to the reauthorization of the HEA by the Higher Education Opportunity Act (HEOA; P.L. 110-315) in
2008, Congress passed measures to extend the HEA al owing for the continuation of the Pel Grant
program. The last authorized maximum award specified in law prior to the HEOA was $5,800 for AY2003-
2004; therefore, the authorized maximum award is listed as $5,800 in AY2008-2009 in this table.
Table A-2. Mandatory Add-On Amounts to the Base Maximum Award
(Pre-SAFRA Act), AY2008-2009 Through AY2017-2018
Fiscal Year
Award Year
Mandatory Add-On Amount
FY2008 AY2008-2009
$490
FY2009 AY2009-2010
$490
FY2010 AY2010-2011
$690
FY2011 AY2011-2012
$690
FY2012 AY2012-2013 $1,090
FY2013 AY2013-2014
NA
FY2014 AY2014-2015
NA
FY2015 AY2015-2016
NA
FY2016 AY2016-2017
NA
FY2017 AY2017-2018
NA
Source: HEA.
Notes: “NA” means not applicable.
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Table A-3. Mandatory Appropriations for the Pell Grant Program (Pre-SAFRA Act),
AY2008-2009 Through AY2017-2018
(dollars in millions)
FY2009
Technical
CCRAA
ARRA
Amendments
Total Mandatory
Fiscal Year
Award Year
Funding
Funding
to the HEA
Appropriations
FY2008
AY2008-2009
$2,041 __ __
$2,041
FY2009 AY2009-2010 $2,090
$643
__
$2,733
FY2010 AY2010-2011 $3,030
$831
__
$3,861
FY2011
AY2011-2012
$3,090 __ __
$3,090
FY2012
AY2012-2013
$5,050 __ __
$5,050
FY2013 AY2013-2014 $105
__
$153
$258
FY2014
AY2014-2015
$4,305 __ __
$4,305
FY2015 AY2015-2016 $4,400
__
$52
$4,452
FY2016
AY2016-2017
$4,600 __ __
$4,600
FY2017
AY2017-2018
$4,900 __ __
$4,900
Total Mandatory
Appropriations
$33,611 $1,474 $205
$35,290
(FY2008 to FY2017)
Source: CRS analysis of the HEA prior to the enactment of the SAFRA Act.
Notes: “—“ means that no appropriations were provided beyond the year(s) specified.



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Appendix B. Mathematical Expression for
Calculating the Pell Grant Mandatory Add-On
Award Amounts for AY2014-2015 (FY2014) Through
AY2017-2018 (FY2017)

Expressed As:
IF DBAY(n-1) ≤ $4,860, THEN:

MIAY(n) = (TMPAY(n-1) X (1 + CPI-UCY(n-1) )) – $4,860

IF DBAY(n-1) > $4,860, THEN:

MIAY(n) = (TMPAY(n-1) X (1 + CPI-UCY(n-1) )) – DBAY(n-1)

WHERE
DBAY(n-1) = Discretionary base maximum award for previous award year (n-1);

MIAY(n) = Mandatory add-on amount for the current award year (n), rounded to the nearest
$5 increment;

TMPAY(n-1) = Total maximum Pell Grant award for previous award year (n-1); and

CPI-UCY(n-1) = Change (increase or decrease) in CPI-U from most recently completed
calendar year prior to start of current award year (n-1).

Example:
For example, consider what the mandatory add-on amount would be in AY2016-2017 if (1) the
discretionary base maximum amount is $4,860 in AY2015-2016; (2) the calculated mandatory
add-on amount is $970 in AY2015-2016; and (3) the change in the CPI-U from calendar year
December 2014 to December 2015 is measured at 2%. This would be determined as follows:

MIAY1617 = ($4,860 + $970 ) X (1 + .02) – $4,860
MI AY1617 = ($5,830 X 1.02) – $4,860
MI AY1617 = $5,947 – $4,860
MI AY1617 = $1,087
MIAY1617 = Round $1,087 to nearest $5
MIAY1617 = $1,085

Another example is offered to illustrate the calculations associated with a substantial reduction
in the discretionary base maximum award. Consider what the mandatory add-on amount would
be in AY2016-2017 if (1) the discretionary base maximum amount is $3,700 in AY2015-2016; (2)
the calculated mandatory add-on amount is $970 in AY2015-2016; and (3) the change in the CPI-
U from calendar year December 2014 to December 2015 is measured at 2%. Under such a
scenario, the mandatory add-on amount would be determined as follows:
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MIAY1617 = ($3,700 + $970) X (1 + .02) – $4,860
MI AY1617 = ($4,670 X 1.02) – $4,860
MI AY1617 = $4,763– $4,860
MI AY1617 = ($97)
MIAY1617 = Round ($97) to nearest $5
MIAY1617 = ($100)

Source: CRS analysis of P.L. 111-152 and President’s FY2015 Budget.

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Appendix C. Federal Pell Grant Recipients, AY1973-
1974 to AY2012-2013


Table C-1. Federal Pell Grant Recipients, AY1973-1974 to AY2012-2013
Award Year
Pell Grant Recipients
Annual Change
% Change
1973-1974 176,000
n/a n/a
1974-1975 567,000

391,000
222.2%
1975-1976 1,217,000
650,000
114.6%
1976-1977 1,944,000
727,000 59.7%
1977-1978 2,011,000
67,000 3.4%
1978-1979 1,893,000
(118,000) (5.9%)
1979-1980
2,538,000
645,000
34.1%
1980-1981
2,708,000
170,000
6.7%
1981-1982
2,709,000
1,000
0.0%
1982-1983 2,523,000
(186,000) (6.9%)
1983-1984
2,759,000
236,000
9.4%
1984-1985 2,747,000
(12,000) (0.4%)
1985-1986
2,813,000
66,000
2.4%
1986-1987 2,660,000
(153,000) (5.4%)
1987-1988
2,882,000
222,000
8.3%
1988-1989
3,198,000
316,000
11.0%
1989-1990
3,322,000
124,000
3.9%
1990-1991
3,405,000
83,000
2.5%
1991-1992
3,786,000
381,000
11.2%
1992-1993
4,002,000
216,000
5.7%
1993-1994 3,756,000
(246,000) (6.1%)
1994-1995 3,675,000 (81,000) (2.2%)
1995-1996 3,612,000 (63,000) (1.7%)
1996-1997 3,666,000
54,000
1.5%
1997-1998 3,733,000
67,000
1.8%
1998-1999
3,855,000
122,000
3.27%
1999-2000
3,764,000
(91,000)
(2.36%)
2000-2001
3,899,000
135,000
3.59%
2001-2002 4,341,000 442,000

11.34%
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Award Year
Pell Grant Recipients
Annual Change
% Change
2002-2003 4,779,000 438,000

10.09%
2003-2004
5,140,000
361,000
7.55%
2004-2005
5,308,000
168,000
3.27%
2005-2006 5,168,000 (140,000)

(2.64%)
2006-2007
5,165,000
(3,000)
(0.06%)
2007-2008
5,543,000
378,000
7.32%
2008-2009 6,157,000 614,000

11.08%
2009-2010 8,094,000 1,937,000

31.46%
2010-2011 9,308,000 1,214,000

15.00%
2011-2012
9,444,000
136,000
1.46%
2012-2013 8,959,000 (486,000)
(5.14%)
Source: U.S. Department of Education, AY2012-13 Pell Grant End-of-Year Report.
Note: Recipient figures rounded to the nearest thousand.
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Appendix D. Acronyms
ARRA
American Recovery and Reinvestment Act (P.L. 111-5)
BCA
Budget Control Act of 2011 (P.L. 112-25)
CBO
Congressional Budget Office
CCRAA
College Cost Reduction and Access Act of 2007 (P.L. 110-84)
CPI-U
Consumer Price Index for All Urban Consumers
COA Cost
of
Attendance
Direct Loan
William D. Ford Direct Loan program
ED
U.S. Department of Education
EFC
Expected Family Contribution
FAFSA
Free Application for Federal Student Aid
GED
General Education Development Certificate
HEA
Higher Education Act of 1965 (P.L. 89-329), as amended
HEOA
Higher Education Opportunity Act of 2008 (P.L. 110-315)
HERA
Higher Education Reconciliation Act of 2005 (Title VIII-A of the Deficit
Reduction Act of 2005 (P.L. 109-171))
IHE
Institution of Higher Education
ISIR
Institutional Student Information Record
NPSAS
U.S. Department of Education, National Postsecondary Student Aid Study
Private for-profit
Sometimes referred to as “proprietary”
SAFRA Act
Title II-A of the Health Care and Education Reconciliation Act of 2010;
P.L. 111-152)
SAR Student
Aid
Record




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Author Contact Information

Cassandria Dortch

Analyst in Education Policy
cdortch@crs.loc.gov, 7-0376

Acknowledgments
The original version of this report was developed and written by former CRS Analyst Shannon Mahan.

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