Federal Pell Grants: Implications of Increasing the Maximum Award

Federal Pell Grants: Implications of Increasing the Maximum Award

Order Code RL32923
CRS Report for Congress
Received through the CRS Web
Federal Pell Grants: Implications of Increasing
the Maximum Award
May 17, 2005
Charmaine Mercer
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service { The Library of Congress

Federal Pell Grants:
Implications of Increasing the Maximum Award
Summary
Every year the maximum Pell Grant award is established during the
appropriations process. Debate often ensues during this process about the feasibility
of increasing the maximum Pell award. As families continue to confront rising
college prices, federal student aid in general, and Pell Grants specifically, become
particularly important for needy students. Many researchers and policymakers
maintain that the Pell Grant does not keep up with the increasing price of attending
college or even with inflation. In light of this, many propose that the annual
appropriation for the program should be increased. Policymakers continue to
contend with the mounting pressures of rising college prices and the adequacy of the
Pell Grant award to offset these expenses.
This report analyzes selected characteristics of Pell recipients and the estimated
impact upon these recipients and the costs of the program as the maximum
appropriated award is increased. This is followed by a discussion of select legislative
proposals to increase the maximum award and the Administration’s budget request
for FY2006.
Increasing the maximum Pell award by $100, to $4,150, would increase the
estimated program costs by approximately $400 million for award year 2005-2006.
If the maximum Pell award were increased to $5,800, the estimated amount of aid to
students would increase by more than 58% over the estimated amount for a
maximum grant of $4,050, to $20.2 billion. Increasing the maximum Pell award also
increases the number of eligible participants, both overall and among students in each
dependency group.
Closer examination of each dependency group reveals that an increase in the
maximum award would change the representation of each dependency group within
the population of Pell Grant recipients. As the maximum Pell award increases, the
percentage of dependent recipients and independent recipients without dependents
increases slightly. Dependent recipients represent less than 40% of all recipients
under current law; the percentage would increase to an estimated 41.7% if the
maximum award were increased to $5,800. Conversely, independent recipients with
dependents would decrease from 41.8% to approximately 39% if the maximum
award were increased to $5,800.
Finally, the analysis reveals that an increase in the appropriated maximum Pell
Grant greatly increases the amount of the average Pell award for the lowest-income
recipients in each dependency group. Recipients in the lowest family income group
would have the largest average Pell award under each selected increase in the
maximum Pell Grant.
This report will be updated as warranted by major legislation or other relevant
developments.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Federal Need Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expected Family Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EFC and Pell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Estimated Impact of Increasing the Appropriated Maximum Pell Grant . . . . . . . . 6
How Much Will Student Aid Increase? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A Pattern Develops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Recipient Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recipients and Family Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Average Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Who Benefits Most from the Increase? . . . . . . . . . . . . . . . . . . . . . . . . 15
Legislative Proposals During the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . 20
FY2006 Budget Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
List of Figures
Figure 1. Estimated Number of Dependent Pell Grant Recipients by
Family Income, Appropriated Maximum Pell Grant and Average
Pell Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 2. Estimated Number of Independent Pell Grant Recipients with
Dependents by Family Income, Appropriated Maximum Pell Grant and
Average Pell Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 3. Estimated Number of Independent Pell Grant Recipients
without Dependents, by Family Income, Appropriated Maximum Pell
Grant and Average Pell Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
List of Tables
Table 1. Estimated Amount of Pell Grant Aid to Recipients for Award Year
2005-2006 by Dependency Status and Selected Increases in the
Maximum Appropriated Pell Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 2. Estimated Impact of Selected Increases in the Maximum Pell
Grant on 2005-2006 Pell Grant Recipients by Dependency Status . . . . . . . . 9
Table 3. Selected Increases in the Appropriated Maximum Pell Grant:
Effect on Composition of Recipients by Dependency Status . . . . . . . . . . . 10
Table 4. Estimated Percentage Change of Pell Grant Recipients with
Selected Appropriated Maximum Awards . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. Estimated Impact of an Increase in the Maximum Appropriated
Pell Grant by Family Income and Dependency Status . . . . . . . . . . . . . . . . . 14

Federal Pell Grants: Implications of
Increasing the Maximum Award
Introduction
Every year the maximum Pell Grant award is established during the
appropriations process. Debate often ensues during this process about the feasibility
of increasing the maximum Pell award. As families continue to confront rising
college prices, federal student aid in general, and Pell Grants specifically, become
particularly important for needy students. During the past few years there has been
a steady increase in college prices, without a comparable increase in income for low-
income families.1
Many researchers and policymakers maintain that the Pell Grant does not keep
up with the increasing price of attending college or even with inflation. It is
estimated that the price of tuition, fees, room and board, has increased by
approximately $500 per year, since 2000-2001 to the present, at four-year public
institutions, whereas the maximum appropriated Pell Grant has increased by a total
of $300 since FY2001.2 In light of this, many propose that the annual appropriation
for the program should be increased. At the same time, there are perennial, and
possibly increasing, constraints on the availability of funds to pay for large increases
in Pell Grant appropriations.
Policymakers continue to contend with the mounting pressures of rising college
prices, and the adequacy of the Pell Grant award to offset these expenses. However,
it is estimated that a $100 increase in the maximum appropriated award increases the
total costs of the program by as much as $400 million.3 This report models different
scenarios involving increases to the maximum Pell award to examine the effects
upon the number of recipients and the amount of student aid awarded. Specifically,
the following questions are examined:
! How much would certain increases in the appropriated maximum
Pell Grant cost?
1 See CRS Report RL32100, College Costs and Prices: Background and Issues for
Reauthorization of the Higher Education Act, by Rebecca Skinner.
2 See College Board, Trends in College Pricing 2004. Available at
[http://www.collegeboard.com/prod_downloads/press/cost04/041264TrendsPricing2004
_FINAL.pdf].
3 This estimate is limited to increases that occur during Pell award year 2005-2006. For
additional information, see Department of Education, Fiscal Year 2005 Justifications of
Appropriation Estimates to the Congress, vol. 2, p. N-27.

CRS-2
! Does a consistent pattern develop (e.g., an award increase of $100
raises program costs by $400 million)?
! What are the implications for the recipients (e.g., independent
students versus dependent students, family income below $10,000
versus above $60,000)?
! How would the average Pell Grant award change under different
scenarios?
! Which group would benefit most from increasing the appropriated
maximum Pell Grant?
During the reauthorization of the Higher Education Act (HEA), the Congress
is likely to debate what changes may be needed in the Pell Grant program. It is
expected that the answers that emerge from this analysis will help to inform the
policymaking process.
This report provides a brief background on the Pell Grant program and the
related appropriations process. The report also analyzes selected characteristics of
Pell recipients and the estimated impact upon these recipients and the costs of the
program as the maximum appropriated award is increased. This is followed by a
discussion of selected legislative proposals to increase the maximum award and the
Administration’s budget request for FY2006.
Background
Pell Grants (Pell) are the largest single source of federal grant aid to
postsecondary students. Pell Grants are need-based aid, and are intended to function
as the foundation of all student aid for needy, undergraduate students. Pell Grants
are considered to be the foundation of student aid because other federal aid (e.g.,
federal work study, student loans) is calculated after the amount of the Pell award is
determined. The program provides several billion dollars annually to millions of
undergraduate students. The FY2005 appropriation for Pell is $12.3 billion, and it
is projected to provide grants to 5.3 million recipients.
Each year during the appropriations process, significant debate occurs regarding
the difference between the appropriated maximum Pell award and the authorized
maximum Pell award,4 and the ability of the grant to offset the price of attending
college. The authorized maximum Pell award is the amount that is specified in the
HEA. The appropriated maximum Pell award is set in the annual appropriations
legislation for the Department of Education. The appropriated maximum Pell award
overrides the authorized maximum Pell award. Federal funding is appropriated
annually to ensure that all eligible applicants, who apply for federal aid, and attend
an eligible postsecondary institution, receive a Pell Grant. Because the program is
4 The most recent authorized (FY2003) maximum Pell award is $5,800, and the appropriated
maximum award for FY2005 is $4,050.

CRS-3
forward funded,5 if the costs of the Pell Grant program exceed the current fiscal
year’s appropriation, which is likely if the estimates are incorrect (e.g., there is a
greater increase of eligible applicants than expected), or the appropriated amount is
lower than what is needed to cover the estimated amount of student aid for a
particular award year, the Department of Education (ED) is allowed to use
appropriated monies from the next fiscal year to cover the costs of the current award
year. This process of ensuring that grant payments will be made, irrespective of the
amount of funds appropriated for a particular fiscal year, has led some to depict the
program as a “quasi entitlement” program.
The maximum Pell Grant that can be awarded is specified in the annual
appropriations legislation for ED. In addition, the minimum Pell Grant that can be
awarded — currently $400 — is specified in the program statute. For additional
information about the Pell Grant program see CRS Report RL31668, Federal Pell
Grant Program of the Higher Education Act: Background and Reauthorization.
Data Analysis
The analyses presented in this report use estimated data derived by CRS from
the Pell Grant estimation model, developed and maintained by the U.S. Department
of Education’s Budget Service. ED bases its budget requests on the results from this
model. The U2005B version of the model was used for the analyses presented.6 The
estimated costs and the number and characteristics of recipients included in this
report are provided to suggest the relative magnitude and nature of the impact of
possible changes in the Pell Grant program. The numbers and characteristics
presented are not official program cost estimates. The report utilizes Pell data for
award year 2005-2006.7
The family income categories used in the analyses presented were constructed
based on income categories used by the National Postsecondary Student Aid Study
(NPSAS) for studying federal student aid recipients by dependency status and family
income, and the Pell estimation model. NPSAS income categories were chosen
because they separate recipients by dependency status (dependent and independent
recipients), and because they closely approximate the results produced by the Pell
model. The format of the income groupings generated by the Pell estimation model
is pre-established and as a result constrains the possible income groupings.
5 For additional information regarding federal, forward-funded programs, see CRS Report
RL32303, Appropriations for FY2005: Labor, Health and Human Services and Education,
by Paul M. Irwin.
6 The Office of Management and Budget Mid-Session Review economic assumptions are
used in this version of the model.
7 The Pell award year 2005-2006 begins July 1, 2005 and ends on June 30, 2006.

CRS-4
Federal Need Analysis
Need analysis is a complex system that is used to allocate billions of dollars of
federal student aid under Title IV of the HEA. It entails gathering financial data,
which is provided by the student via the Free Application for Federal Student Aid
(FAFSA), using these data to calculate the expected family contribution (EFC), and
packaging of the applicant’s financial aid award by the higher education institution’s
financial aid administrator.
This section provides a brief description of the EFC and how it is calculated. It
also discusses need analysis and its interaction with the Pell Grant. This description
is very generic. For detailed information regarding the EFC calculation and the
FAFSA, ED has posted descriptions for recent years.8
Expected Family Contribution
The expected family contribution (EFC) is the amount that the federal need
analysis system determines a family is expected to contribute toward postsecondary
education expenses. In calculating the EFC, consideration is given to available
income, and for some families, available assets. In addition, living expenses,
retirement needs, and federal and state tax liability are also considered.
The calculation of the EFC varies depending upon the applicant’s dependency
status. There are three separate dependency classifications for individual applicants:
dependent student, independent student with dependents, and independent student
without dependents. This is important because parental financial information is not
considered if the applicant meets the statutory definition of an independent student.
To be classified as statutorily independent (Title IV, Section 480(d)), an applicant
must meet one of the following conditions:
! 24 years of age or older;
! married;
! enrolled in a graduate or professional program;
! have a dependent other than a spouse;
! orphan or ward of the court (or was up until age 18); or
! a military veteran.
Students who do not meet any of the aforementioned conditions are considered to be
dependent for the purposes of Title IV student aid.
The amount of federal student aid awarded is primarily dependent upon a
student’s EFC and the cost of attendance (COA) of the postsecondary institution that
the student chooses to attend — this is true for all federal student aid programs
except for the Pell Grant program (to be discussed). The COA is a measure of a
8 For specific information regarding the expected family contribution calculation see
[http://www.ifap.ed.gov/IFAPWebApp/currentEFCInformationPag.jsp]. In addition, see
CRS Report RL32083, Federal Student Aid Need Analysis: Background and Selected
Simplification Issues, by Adam Stoll and James B. Stedman.

CRS-5
student’s education-related expenses, and is determined by each higher education
institution. In general, the COA is the sum of tuition and fees; an allowance for
books, supplies, transportation, and miscellaneous personal expenses; and a room and
board allowance.9 After the aid administrator determines a student’s eligibility for
student aid (e.g., federal, state and institutional grants and loans), the final outcome
is the financial aid award, which consists of the specific sources and amounts of
student aid each applicant will receive to help pay for his/her education-related
expenses.
EFC and Pell. The primary Pell Grant award rule is that a student’s annual
grant is the least of three different amounts:
! maximum appropriated Pell Grant minus EFC;
! COA minus EFC;10 or
! the tuition sensitivity amount.11
For nearly all Pell recipients, the Pell Grant award is calculated by subtracting the
EFC from the maximum appropriated Pell Grant for the year (i.e., without regard for
the COA). This is because the maximum Pell Grant minus the recipient’s EFC is
almost always lower than the COA minus the EFC. The other two parts of the award
rule are likely to apply only in relatively infrequent situations — when COA falls
below the appropriated maximum Pell Grant or when tuition is less than $675, and
other conditions apply. As discussed, by law, a Pell Grant award cannot be less than
$400. For those students whose Pell Grant would be between $200 and $400, the law
provides a $400 grant, otherwise known as “the bump.” A student who qualifies for
less than a $200 grant will not receive a Pell Grant.12
9 It can also include an allowance for dependent care expenses (for students with
dependents); costs associated with study abroad programs for students engaged in such
programs; expenses associated with a disability for students with disabilities; and the costs
associated with employment under a cooperative education program.
10 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 COA after taking EFC into account.
11 As implemented by ED, tuition sensitivity reduces the Pell Grant received by a small
number of the poorest students attending institutions with very low tuition charges. For
FY2005, the only students whose Pell Grant may possibly be reduced under tuition
sensitivity are those students whose tuition charges (and any allowances for dependent care
or disability related expenses) are less than $675; whose EFCs are $700 or less; and whose
total COA is $3,400 or higher. These conditions are delineated in the 2005-2006 Pell Grant
payment and disbursement tables, which are available on the web at
[http://www.ifap.ed.gov/dpcletters/attachments/2005payschedrev.pdf].
12 For additional information about the EFC and the Pell Grant, see CRS Report RL31668,
Federal Pell Grant Program of the Higher Education Act: Background and
Reauthorization, by Charmaine Mercer.

CRS-6
Estimated Impact of Increasing the
Appropriated Maximum Pell Grant
This section analyzes the impact of raising the appropriated maximum Pell
Grant award by $100, $500 and $1,750; thereby increasing the appropriated
maximum award to $4,150, $4,550 and $5,800 respectively. These amounts were
selected in light of recent proposals to increase the maximum Pell award by the
above-mentioned amounts. Specifically, the Administration recently proposed
increasing the maximum Pell award by $100, every year, for the next five years,
which would increase the maximum award to $4,550 at end of the fifth year.13 The
$5,800 maximum Pell Grant amount was included in the analysis because this is the
most recent authorized maximum grant, and some Members of Congress believe
funds should be appropriated to equal this amount.14 These three amounts provide
a range of relatively small, medium, and large increases in the maximum Pell Grant.
In the following sections, this report analyzes selected changes in the number
of recipients by dependency status and family income level. It further analyzes the
changes in program costs for each of the three maximum award scenarios. As
previously stated, these estimates are intended to illustrate the relative magnitude and
nature of proposed changes, and are not intended to serve as official cost estimates
for the Pell Grant program.
How Much Will Student Aid Increase?
ED estimates that for award year 2005-2006, with an appropriated maximum
Pell Grant of $4,050, the total amount of aid provided for Pell Grant recipients would
be approximately $12.8 billion.15 As is illustrated by Table 1, if the appropriated
maximum Pell Grant were increased by $100 to $4,150, the estimated total amount
of aid available would increase to $13.1 billion, a 3.2% increase over the amount of
student aid available under current law. The total estimated amount of Pell aid would
greatly increase if the appropriated maximum award were raised to $4,550 or $5,800.
For example, the estimated amount of Pell Grant aid to students would increase by
more than 58%, for a total of $20.2 billion if the maximum appropriated award were
increased from $4,050 to $5,800.
Table 1 shows that an increase in the maximum Pell Grant generally means
more aid for all students eligible for assistance. Table 1 also shows the breakdown
of the estimated increase of Pell Grant aid to students by dependency status. In each
13 See, for example, Stephen Burd, “President Bush Calls for Increase in Pell Grants,”
Chronicle of Higher Education, Jan. 28, 2005; Elizabeth Guerard, “President’s FY2006
Budget Retires Pell Grant Shortfall, Eliminates Federal Role in Perkins Loan Program,”
National Association of Student Financial Aid Administrators, Feb. 8, 2005.
14 For example, H.Res. 132 was introduced on Mar. 1, 2005, by Rep. David Wu. The
resolution expressed the sense of the House that the appropriated maximum award should
be increased to $5,800 (most recent authorized maximum Pell Grant).
15 Department of Education, Fiscal Year 2005 Justifications of Appropriation Estimates to
the Congress, vol. 2, p. N-28.

CRS-7
scenario, dependent recipients would receive a greater percentage increase over
current law than either of the two independent groups. For example, increasing the
maximum Pell Grant from $4,050 to $5,800 would produce a 65% increase in the
amount of Pell aid for dependent students. Independent recipients with dependents
and independent recipients without dependents would receive 51% and 61%
increases, respectively, over the amount of Pell Grant aid awarded to each group
under current law.
A Pattern Develops. Table 1 also generally validates ED’s rule regarding
an increase in the appropriated maximum award; a $100 increase in the maximum
award would increase the program costs by approximately $400 million. However,
it should be noted that the rule becomes somewhat less accurate as the amount of the
appropriated maximum Pell Grant increases. For example, if the maximum Pell
award were increased by $100, to $4,150, the amount of aid awarded would increase
by approximately $408 million. Similarly, if the appropriated maximum award were
increased to $4,550, a $500 increase over the current maximum award, the estimated
amount of aid would increase by approximately $2.1 billion (or slightly more than
five times $400 million). However, if the appropriated maximum grant were
increased to equal the most recent authorized maximum ($5,800), or a $1,750
increase, the estimated amount of aid awarded to recipients would increase by
approximately $7.5 billion versus the $7.0 billion produced by ED’s rule
(approximately 18.7 times $400 million).

65.3%
51.2%
61.2%
58.8%
w
la
% increase
over current
Status and
d
m
een
an
imu
x
ard
betw
$5,800
$3,439,468
$2,655,148
$1,414,146
$7,508,762
.
Difference
ma
aw
ts
current law
e cos
ell
trativ
Dependency
m P
ard
is
in
$5,800
imu
x
aw
$8,705,930
$7,843,472
$3,722,992
a
$20,272,394
ard
M
adm
y
w
e an
d
u
17.6%
14.1%
16.3%
15.7%
cl
over
t in
% increase
current law
o
ice.
t.
es n
o
m
d
t d
een
an
et Serv
g
n
imu
d
percen
u
o
ard Year 2005-2006 by
x
$928,387
$754,661
$387,777
u
th
$4,550
ard
$2,070,825
w
betw
ppropriated Pell A
Difference
ma
aw
current law
’s B
ten
n
e-
is am
h
t on
ell
catio
ts. T
u
8
en
m P
eares
d
ard
f Ed
e n
$6,194,849
$5,942,985
$2,696,623
t o
stu
CRS-
aximum A
$4,550
imu
x
aw
$14,834,457
a
en
ts to
M
artm
ed to th
d
ran
n
(dollars in thousands)
r g
o
3.4%
2.9%
3.3%
3.2%
f
w
es rou
id to Recipients for A
la
ated
e U.S. Dep
tag
n
% increase
th
over current
m
esig
ro
is d
m
d
el f
at
een
an
d
o
th
imu
n
x
ard
$76,205
$181,573
$149,863
$407,641
m
n
betw
$4,150
t $1,000. Percen
Difference
ma
aw
current law
riatio
atio
p
eares
ro
m
p
e n
Selected Increases in the M
u
ard
t estim
im
e ap
x
$4,150
l aw
f th
mount of Pell Grant A
Ma
Pel
$5,448,035
$5,338,187
$2,385,051
ed to th
$13,171,273
d
t o
ell Gran
n
n
u
e P
o
th
g
ere rou
e am
sin
w
th
($4,050)
$5,266,462
$5,188,324
$2,308,846
ly
$12,763,632
ates
n
Current law
ates u
tim
ts is o
ts
en
ts
en
ts
d
ts
d
tus
en
ts
stu
a
den
den
t
CRS estim
ll dollar es
st
den
ep
u
den
A
to
Table 1. Estimated A
d
o
id
Category of
recipients by
dependency
depen
ith
depen
ith
tal
o
A
Depen
In
w
In
w
depen
T
*
Source:
Note:
*

CRS-9
Recipient Changes
As the appropriated maximum Pell award increases, it is estimated that more
recipients would become eligible for a Pell Grant. As illustrated in Table 2, each
increase in the appropriated maximum Pell award would usher more recipients into
the program. Each of the three increases in the maximum award also increases the
number of recipients in each dependency group, with the greatest increase being
realized for dependent recipients. For example, an increase from $4,050 to a $5,800
maximum appropriated award would increase the number of dependent recipients by
an estimated 18.6% over the number of dependent recipients under current law.
Overall, increasing the appropriated maximum Pell Grant from $4,050 to $5,800
increases the total number of recipients by an estimated 11.7%.
Table 2. Estimated Impact of Selected Increases in the
Maximum Pell Grant on 2005-2006 Pell Grant Recipients by
Dependency Status
(numbers in thousands)
Number of Number of
Number of
Number of
recipients
recipients % increase recipients % increase recipients % increase
Category of
current
$4,150
over
$4,550
over
$5,800
over
recipients by
law
maximum
current
maximum
current
maximum
current
dependency status
($4,050)
Pell award
law
Pell award
law
Pell award
law
Dependents
2,085
2,111
1.2%
2,210
6.0%
2,473
18.6%
Independents
2,216
2,223
0.3%
2,251
1.6%
2,307
4.1%
with dependents
Independents without
dependents
1,006
1,015
1.0%
1,053
4.6%
1,146
14.0%
Total
5,307
5,349
0.8%
5,514
3.9%
5,926
11.7%
Source: CRS estimates using the Pell Grant estimation model from the U.S. Department of
Education’s Budget Service.
Note: Percentages rounded to the nearest one-tenth percent.
The increase in the maximum appropriated Pell Grant also changes the
representation of each dependency group within the population of all Pell Grant
recipients. As indicated in Table 3, as the maximum award increases, the percentage
of dependent recipients and independent recipients without dependents increases
slightly. Dependent recipients represent slightly less than 40% of all recipients under
current law; the percentage would increase to an estimated 41.7% if the maximum
award were increased to $5,800. Conversely, independent recipients with dependents
would decrease from 41.8% to approximately 39% if the maximum award were
increased to $5,800.

CRS-10
Table 3. Selected Increases in the Appropriated Maximum Pell
Grant: Effect on Composition of Recipients by Dependency
Status
(numbers in thousands)
Current
$4,150
$4,550
$5,800
% of all
Category of
law
% of all
max. Pell
% of all
max. Pell
% of all
max. Pell recipien
recipients
($4,050)
recipients
award
recipients
award
recipients
award
ts
Dependents
2,085
39.3%
2,111
39.5%
2,210
40.1%
2,473
41.7%
Independents with
2,216
41.8%
2,223
41.6%
2,251
40.8%
2,307
38.9%
dependents
Independents without
1,006
19.0%
1,015
19.0%
1,053
19.1%
1,146
19.3%
dependents
Total
5,307
100%
5,349
100%
5,514
100%
5,926
100%
Source: CRS estimates using the Pell Grant estimation model from the U.S. Department of
Education’s Budget Service.
Note: Percentages rounded to the nearest one-tenth percent. As a result, column entries may not add
to column totals shown.
Recipients and Family Income. Because the Pell award is generally the
difference between the appropriated maximum award and the expected family
contribution, as the maximum award increases, recipients with larger family incomes
are ushered into the program.16
Dependent Recipients. As illustrated in Table 4, the number of recipients
in the highest family income group (over $60,000)17 increases from 23,000 when the
maximum Pell award is $4,050, to more than 87,000 recipients if the maximum
award were increased to $5,800. Further, recipients with family incomes between
$40,001 and $60,000 begin to comprise a larger percentage of all dependent
recipients as the maximum award increases. Recipients in this group increase from
approximately 13% when the maximum Pell is $4,050 to nearly 20% if the award
were increased to $5,800.
Conversely, as the maximum award increases, the number of dependent
recipients in the lowest family income group ($20,000 or less) slightly increases, but
their percentage of total dependent Pell Grant recipients actually decreases. The
percentage of dependent recipients with a family income of $20,000 or less would
16 For additional information about calculating the Pell Grant award, see CRS Report
RL31668, Federal Pell Grant Program of the Higher Education Act: Background and
Reauthorization, by Charmaine Mercer.
17 The family income reported in all of the tables is the aggregate of earned and unearned
income. The income categories in the tables differ for each of the dependency groups
because the distribution of income within each group varies. To the extent possible (bound
by some constraints in the model) the income categories have been constructed in a manner
that reflects the income characteristics of a dependency group and attempts to group families
with similar EFC levels together.

CRS-11
decrease from approximately 39% of all dependent Pell recipients with a maximum
award of $4,050 to slightly less than 33% if the award were increased to $5,800.
Independent Recipients with Dependents. As shown in Table 4, the
estimated number of recipients in the highest income group (over $30,000) would
increase with each increase in the maximum award. The number of recipients in other
income groups were unchanged under each award increase scenario.
Independent Recipients without Dependents. A somewhat similar
pattern is also observed among independent recipients without dependents. As
illustrated in Table 4, the estimated number of Pell recipients in the lowest family
income group ($7,500 or less) would not change for each increase in the maximum
award. However, the number of recipients in the remaining groups would increase.
As a result, if the maximum appropriated Pell award were increased, the recipients
from the lowest family income group would comprise a lower share of the total. For
example, independent recipients without dependents with the lowest family income
represent approximately 54% of all independent recipients without dependents when
the maximum Pell award is $4,050, and the percentage would decrease to 47% if the
maximum award were increased to $5,800.
Similar to what was observed for dependent recipients, the estimated number
of recipients in the highest income group (over $25,000) while remaining relatively
small, nearly triples if the maximum award increases from $4,050 to $5,800.
Recipients in the $10,001 to $25,000 family income group increase by the greatest
numbers.

l
3.5%
1.2%
.
32.8%
44.2%
19.5%
23.5%
26.1%
25.1%
25.4%
47.1%
13.6%
38.0%
n
100.0%
100.0%
100.0%
w
o
ards
of al
w
%
recipients
tals sh
to
n
ell
m
at
lu
m P
87,000
14,000
co
ber of
810,000
482,000
542,000
601,000
579,000
585,000
540,000
156,000
436,000
aximum A
1,094,000
2,473,000
2,307,000
1,146,000
to
$5,800
imu
d
x
Num
recipients
ma
t ad
o
n
ay
l
1.7%
0.8%
36.4%
46.3%
15.6%
24.1%
26.7%
25.7%
23.5%
100%
51.3%
14.8%
33.1%
100.0%
100.0%
tries m
of al
en
ppropriated M
%
recipients
n
m
ell
lt, colu
at
8,000
u
m P
37,000
ice.
805,000
344,000
542,000
601,000
579,000
529,000
540,000
156,000
349,000
ber of
1,024,000
2,210,000
2,251,000
1,053,000
s a res
$4,550
imu
x
Num
et Serv
recipients
t. A
ith Selected A
ma
dg
u
’s B
percen
l
1.2%
0.5%
38.0%
46.9%
13.8%
24.4%
27.0%
26.0%
22.5%
53.2%
15.3%
31.0%
th
100.0%
100.0%
100.0%
cation
ten
of al
t dependents
e-
12
%
u
recipients
Edu
ith dependents
t on
itho
t of
CRS-
en
eares
Dependent
ell
at
e n
5,000
m P
26,000
ber of
803,000
991,000
291,000
542,000
601,000
579,000
501,000
540,000
155,000
315,000
2,111,000
2,223,000
1,015,000
$4,150
imu
ed to th
x
Independent w
d
Num
recipients
Independent w
n
ma
e U.S. Departm
th
es rou
l
1.1%
0.5%
rom
tag
38.5%
47.1%
13.3%
24.5%
27.1%
26.1%
22.3%
53.7%
15.4%
30.4%
100.0%
100.0%
100.0%
of al
odel f
%
m
recipients
ation
t 1,000; percen
m
u
at
im
5,000
t estim
eares
x
23,000
802,000
982,000
278,000
,085,000
542,000
601,000
579,000
494,000
,216,000
540,000
155,000
306,000
,006,000
ber of
a
2
2
1
e n
Pell
ell Gran
Num
recipients
e P
ed to th
$4,050 m
d
th
n
g
rou
by
sin
ily
m
ates
ates u
tim
nd fa
e
a
m
t es
ess
ess
inco
ess
$40,000
$60,000
$20,000
$30,000
$25,000
$10,000
CRS estim
ecipien
Table 4. Estimated Percentage Change of Pell Grant Recipients w
R
dependency
er $60,000
tal
er $30,000
tal
er $25,000
tal
Category of recipients
o
o
o
$20,000 or l
$20,001-
$40,001-
ov
T
$10,000 or l
$10,001-
$20,001-
ov
T
$7,500 or l
$7,501-
$10,001-
ov
T
Source:
Note:

CRS-13
Average Award. The average Pell award increases as the appropriated
maximum Pell Grant increases. Recipients in the lowest family income group have
the largest average awards under each of the three maximum award scenarios. This
is true for each dependency category. Pell Grant recipients with the lowest family
incomes — $20,000 or less for dependents, $10,000 or less for independent
recipients with dependents and $7,500 or less for independent recipients without
dependents — have larger average awards than recipients with higher incomes (see
Table 5). However, it should be noted that dependent recipients in the lowest family
income group have the highest average awards of any group, including both groups
of independent recipients in the lowest family income group.
Dependent Recipients. Recipients with the lowest family incomes have the
highest average Pell award, among all income groups, in each maximum award
scenario. However, with the exception of the highest income group (over $60,000),
the average awards of recipients in the lowest income group also increase by the
least. The average awards of recipients with family incomes between $20,001 and
$40,000, and between $40,001 and $60,000, would increase by the greatest
percentage if the maximum award were increased to $5,800. As shown in Table 5,
the average award for these two groups would increase by 51% and 56% respectively
over current law.
Independent Recipients. The average awards for both groups of
independent recipients are comparable. Although the average awards for
independent recipients without dependents are larger than those for independent
recipients with dependents, recipients in both groups with the lowest family incomes
— $10,000 or less for independent recipients with dependents and $7,500 or less for
independent recipients without dependents — have higher average awards than all
other income groups. However, recipients in this group (both with dependents and
without dependents) also have the smallest increase in the amount of the average
award under each award increase scenario. As illustrated in Table 5, if the maximum
Pell award were increased to $5,800, the average awards for this group would
increase by approximately 43%, whereas the highest income groups increase by 63%
(with dependents) and 80% (without dependents).

e
w
%
ard
43.0%
50.9%
56.4%
38.9%
42.7%
42.9%
49.1%
63.2%
42.6%
43.6%
69.6%
80.0%
creas
over
la
.
In
aw
current
n
of average
w
o

m
at
ard
en
imu
tals sh
Pell
ard
$4,580
$3,541
$2,087
$1,339
$3,921
$3,915
$3,491
$2,295
$4,263
$4,212
$3,161
$1,539
wh
x
Average
aw
$5,800
to
ma
aw
n
m
Income and
t
lu
m
n
ted
id
co
a
t of
le at
n
b
ra
imu
to
ou
la
x
$17,119
d
stim
$116,458
$550,522
$869,422
Pell a
$5,800
E
am
ma
Pell G
$3,709,528
$3,874,250
$1,005,695
$2,125,289
$2,352,624
$2,022,512
$1,343,048
$2,285,930
t ad
Family
avai
o
e
n
ay
over
8.1%
creas
12.3%
14.0%
13.6%
12.3%
12.4%
14.1%
17.1%
12.3%
12.5%
19.9%
19.8%
n
ard
ies m
tr
% I
of average
aw
current law
en
n

m
at
m
ard
en
imu
Pell
ard
$3,597
$2,675
$1,515
$1,042
$3,087
$3,080
$2,673
$1,646
$3,358
$3,300
$2,234
$1,024
wh
x
Average
aw
$4,550
lt, colu
ma
aw
ice.
u
t
m
n
ted
id
et Serv
s a res
a
t of
le at
n
b
ra
g
imu
$5,020
d
ou
la
x
$38,559
u
t. A
stim
$521,132
$870,336
$406,173
$490,464
Pell a
$4,550
ppropriated Pell Grant by
E
am
$2,895,717
$2,739,442
$1,672,980
$1,851,327
$1,548,277
$1,794,967
avai
ma
Pell G
’s B
n
percen
th
Status
.4%
catio
over
2.4%
2.8%
2.6%
-0
2.5%
2.5%
2.8%
3.4%
t dependents
2.5%
2.4%
3.9%
3.7%
u
14
u
ten
ard
ith dependents
f Ed
e-
% increase
of average
itho
aw
current law
t o
t on
CRS-
aximum A
Dependent
en
en
eares
h
m
at
$960
$887
artm
$3,281
$2,412
$1,369
$2,817
$2,809
$2,408
$1,454
$3,066
$3,006
$1,936
e n
(dollars in thousands)
w
imu
Dependency
x
ard
ard
$4,150
Independent w
to th
ma
aw
Independent w
Average Pell
aw
ed
e U.S. Dep
d
n
t
th
m
n
m
ted
id
a
t of
le at
n
b
ra
$2,544
ro
es rou
imu
im
$24,970
ou
la
x
$398,467
$728,857
$359,735
$386,161
el f
tag
Pell a
$4,150
$2,634,281
$2,390,317
$1,526,068
$1,688,479
$1,394,783
$1,636,612
d
Est
am
o
avai
ma
Pell G
m
n
m
ard
at
atio
en
$964
$855
imu
$3,203
$2,347
$1,334
$2,748
$2,740
$2,342
$1,406
$2,990
$2,934
$1,864
l aw
ard
wh
x
t 1,000; percen
Average
$4,050
t estim
Pel
ma
aw
l
eares
le
ell
e n
b
ted
t
ell Gran
a
la
m P
n
t of Pel
a
$22,166
e P
n
$370,864
$694,901
$673,383
$923,599
$578,993
$132,872
ed to th
stim
avai
imu
Gr
$2,568,948
$2,304,484
$1,489,313
$1,647,718
$1,356,391
th
g
d
E
ou
d
at $4,050
x
n
am
ai
ma
sin
ts rou
ily
ates u
n
tus
d
a
n
st
t cou
e a
ess
ess
ess
Table 5. Estimated Impact of an Increase in the M
m
$40,000
$60,000
$20,000
$30,000
$25,000
$10,000
CRS estim
ecipien
Category of
inco
R
er $60,000
er $30,000
er $25,000
recipient by fam
dependency
$20,000 or l
$20,001-
$40,001-
ov
$10,000 or l
$10,001-
$20,001-
ov
$7,500 or l
$7,501-
$10,001-
ov
Source:
Note:

CRS-15
Who Benefits Most from the Increase? When the appropriated maximum
Pell Grant is increased, the estimated number of individuals in the lowest family
income group remains about the same, however, the estimated amount of their
average award significantly increases. Conversely, as the maximum award increases,
the number of individuals in the highest family income group increases, and the
average amount of their Pell awards also increases either slightly or significantly
depending upon the increase in the maximum award. Nevertheless, average awards
remain lower for the relatively high-income group than for the lower-income groups.
Dependent Recipients. Figure 1 illustrates this relationship for dependent
recipients. As noted, recipients in the lowest-income group (less than $20,000),
would receive the largest increase in award dollars, if the maximum award were
increased from $4,050 to $5,800. However, dependent recipients with family
incomes between $40,001 and $60,000, would increase their average award by 56%
over the amount under current law. This percentage increase is greater than the
increase for all other income groups (see Table 5).
The difference in the amount of the average Pell award becomes more
pronounced for lower-income groups when the appropriated maximum award
increases. For example, the average award for a dependent student, with a family
income of less than $20,000 would be slightly more than $4,500 if the maximum Pell
Grant were $5,800 and approximately $3,200 with a maximum Pell of $4,050 (a
difference of approximately $1,300). For a dependent recipient with a family income
over $60,000, the difference in the average award when the maximum grant is $5,800
and when it is $4,050 would be approximately $370 ($1,330 average Pell award
versus a $960 average Pell award).
Independent Recipients with Dependents. The difference in the amount
of the average Pell award among independent recipients with dependents is less
extreme. As shown in Figure 2, the number of independent recipients with
dependents does not significantly increase except for the highest-income group (over
$25,000). It is estimated that more than 90,000 recipients in this income group
would become eligible for a Pell award if the maximum award were increased from
$4,050 to $5,800. Also, the average Pell award for independent recipients with
dependents would not greatly differ for each increase in the maximum grant unless
the appropriated maximum Pell award were increased to $5,800. If the maximum
appropriated Pell award were increased to $5,800, the average award would increase
by 43% for both of the two lowest-income groups ($10,000 or less and $10,001 to
$20,000), and by 50% and 63% for the two highest income groups respectively
($20,001 to $30,000 and over $30,000) (see Table 5).
Independent Recipients Without Dependents. The results for
independent recipients without dependents are similar to the results for independent
recipients with dependents. Figure 3 shows that for this group, the estimated number
of recipients remains constant for each increase in the Pell maximum, except when
the maximum award is $5,800. If the maximum award were increased to $5,800, the
number of recipients in the two highest-income groups would increase. For example,
approximately 130,000 independent recipients without dependents with family
incomes between $10,001 to $25,000 would become eligible for a Pell Grant if the
maximum award were increased from $4,050 to $5,800. Further, the average Pell

CRS-16
award for this group would increase by 80% if the maximum Pell Grant were
increased from $4,050 to $5,800 (see Table 5).
As evidenced by Figures 1, 2 and 3, the number of Pell Grant recipients in the
lowest family income group remains relatively constant for each dependency group,
and for each increase in the maximum appropriated award. Because Pell Grants are
targeted towards the neediest students, individuals with the lowest family incomes
are likely to already receive a grant. Recipients in this group will generally
experience an increase in their Pell award if the maximum award is increased, but the
number of recipients in this group would not significantly change. Conversely, if the
maximum Pell award were increased, the number of recipients in the highest family
income group — in each of the three dependency groups — would increase. In
addition, recipients in this group would also have an increase in their average Pell
award if the maximum Pell Grant were increased, but the increases would be smaller
than those for lower-income recipients.

.
.
.
.
x
x
x
x
a
a
a
a
m
m
.
.
x
x
.
.
hen m
hen m
ents
hen
hen
a
ents
a
ents
x
ents
x
a
a
w
w
ipi
ipi
ipi
ipi
c
c
c
c
d w
d w
d
d
Income,
e
ll M
e
ll M
e
ll M
e
ll M
ar
ar
ar
ar
e
e
e
e
R
R
R
R
$4,050
$4,150
$4,550
$5,800
of
of
of
of
ll aw
ll aw
ll aw
ll aw
e
e
e
e
Family
ard
ber
ber
ber
ber
rd @
rd @
rd @
rd @
w
m
m
m
m
g. P
a
g. P
a
g. P
a
g. P
a
u
$4,050 P
u
$4,150 P
u
$4,550 P
u
$5,800 P
v
v
v
v
N
@
N
@
N
@
N
@
A
aw
A
aw
A
aw
A
aw
d
ar
w
A
l l e
age P
ver
A
erage Pell A
v
,000
,500
,000
,500
,000
,500
,000
,500
,000
00
$5
$4
$4
$3
$3
$2
$2
$1
$1
$5
$0
17
CRS-
r $60,000
e
v
o
01-
0
me
40,
$
$60,000
o
c
n
I
ly
mi
a
F
ppropriated Maximum Pell Grant and A
A
$20,001-
$40,000
s
s
le
Figure 1. Estimated Number of Dependent Pell Grant Recipients by
$20,000 or
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0,
0,
00,
00,
00,
00,
20
00
8
6
4
2
1,
1,
s
ent
pi
eci
R
l l e
P

.
.
.
.
x
x
x
x
Income,
a
a
a
a
m
m
.
.
x
x
.
.
hen m
hen m
ents
hen
hen
a
ents
a
ents
x
ents
x
a
a
w
w
Family
ipi
ipi
ipi
ipi
c
c
c
c
d w
d w
d
d
e
ll M
e
ll M
e
ll M
e
ll M
ar
ar
ar
ar
e
e
e
e
R
R
R
R
$4,050
$4,150
$4,550
$5,800
of
of
of
of
ll aw
ll aw
ll aw
ll aw
e
e
e
e
ard
ber
ber
ber
ber
rd @
rd @
rd @
rd @
w
m
m
m
m
g. P
a
g. P
a
g. P
a
g. P
a
u
$4,050 P
u
$4,150 P
u
$4,550 P
u
$5,800 P
v
v
v
v
N
@
N
@
N
@
N
@
A
aw
A
aw
A
aw
A
aw
ith Dependents by
d
ar
w
A
l l e
age P
ver
A
erage Pell A
v
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
18
30,000
CRS-
$
er
ov
-
,001
me
$20
$30,000
o
c
ndependent Pell Grant Recipients w
n
I
ly
mi
a
F
ppropriated Maximum Pell Grant and A
A
$10,001-
$20,000
s
s
le
$10,000 or
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0,
0,
0,
00,
00,
00,
00,
Figure 2. Estimated Number of I
40
20
00
8
6
4
2
1,
1,
1,
s
ent
pi
eci
R
l l e
P

.
.
.
.
x
x
x
x
a
a
a
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CRS-20
Legislative Proposals During the 109th Congress
This section reviews major legislation introduced during the 109th Congress that
addresses changing the maximum Pell Grant. While there have been several
proposals introduced that pertain to the Pell Grant program, this section is limited
to those that relate to increasing either the maximum authorized grant and/or the
maximum appropriated award.
S. 286 (Dodd, et al.). This bill was introduced on February 3, 2005 and referred
to the Senate, Health, Education, Labor and Pensions Committee on the same day.
The bill proposes to increase the maximum Pell Grant to $7,600 for award year
2006-2007, and by $1,000 increments until award year 2009-2010, when the
maximum award would equal $11,600. It further requires the Secretary of Education
to review each increase to determine if the increase in the Pell Grant increases the
students’ purchasing power at an institution of higher education by at least 5%. If this
is not achieved, the maximum award is to be increased to achieve at least a 5%
increase in purchasing power.
S. 15 (Bingaman, et al.). This bill, entitled “Quality Education for All Act,”
was introduced on January 24, 2005 and referred to the Senate Finance Committee
on the same day. This bill focuses on several education programs and provisions.
Among other things, a section of the bill expresses a sense of the Senate18 that the
maximum Pell award should be increased to $5,100 by award year 2006-2007, and
that the maximum Pell award set by Congress in the authorizing language should be
the amount that eligible students receive.
H.R. 133 (Keller). This bill, entitled “To Increase the Maximum Pell Grant,”
was introduced on January 4, 2005, and referred to the House Subcommittee on 21st
Century Competitiveness on February 9, 2005. The bill proposes to increase the
maximum Pell award to $6,000 for the 2005-2006 award year.
H.R. 134 (Kildee, et al.). This bill, entitled “To Prevent Abuse of the Special
Allowance Subsidies under the Federal Family Education Loan Program,” was
introduced on January 4, 2005, and referred to the House Committee on Education
and the Workforce. The bill primarily focuses on the Federal Family Education Loan
program, however, if passed, it would require that any savings generated from
terminating the allowances specified in Section 483 (b)(2)(B) of the HEA, be used
to increase the annual appropriations for Pell.
H.R. 117 (Holt, et al.). This bill, entitled “Higher Education Affordability and
Fairness Act of 2005,” is comparable to the two bills introduced in the Senate (S. 286
and S. 15), and was introduced on January 4, 2005 and referred to the House
18 S.Res. 8 was introduced on Jan. 4, 2005, by Sen. Collins, et al. Similar to S. 15, it also
expresses the sense of the Senate, but it states that the maximum Pell Grant should be
increased to $4,500 for award tear 2005-2006, and that the authorized amount should be,
“set high enough to accommodate a Federal Pell Grant amount of $9,000 by award year
2010-2011.”

CRS-21
Subcommittee on 21st Century Competitiveness on the same day. Comparable to S.
15, it expresses the sense of the House that the maximum award should be increased
to $4,700. It further states, that the grant should be increased to $4,700 to pay
approximately 20% of tuition, fees, room and board or tuition and fees of the average
public college, which is similar to S. 286.
FY2006 Budget Request
The Administration’s FY2006 budget request proposes to increase the
appropriated maximum Pell award by $100 beginning in the 2005-2006 award year,
and by an additional $100 for the four successive years, for a total Pell award of
$4,550 in the 2009-2010 Pell award year. To produce the increase, the
Administration proposes to change the funding structure of the Pell Grant program.
Under the proposal, part of the funding for the program — the costs of the current
maximum award of $4,050, the Enhanced Pell Grants for State Scholars,19 and
several proposed changes intended to improve the program’s efficacy20 — would
remain discretionary, approximately $13.2 billion. An additional $4.7 billion in
mandatory funding is also being requested. The $4.7 billion is intended to eliminate
the program’s funding shortfall21 — currently $4.3 billion — and to increase the
appropriated maximum Pell Grant by $100.
Conclusions
It is estimated that the price of tuition, fees, room and board, has increased by
approximately $500 per year, since 2000-2001 to the present, at four-year public
institutions, whereas the maximum appropriated Pell Grant has increased by a total
of $300 since FY2001. Several findings from the preceding analysis appear to be
important for federal policymakers as they consider legislative efforts to increase the
maximum appropriated Pell Grant. The discussion below identifies some of these
findings and their importance for policymaking in this area.
According to these analyses, increasing the maximum Pell award by $100
increases the estimated program costs by approximately $400 million for award year
2005-2006. Further, if the appropriated maximum award were increased to equal the
19 The Enhanced Pell Grants for State Scholars would provide an additional $1,000 to a
student who completes the State Scholars curriculum in high school. For additional
information about the Enhanced Pell Grants for State Scholars and the curriculum, see U.S.
Department of Education, Fiscal Year 2006 Budget Summary, p. 54.
20 The administration proposes the following changes to the rules of the Pell Grant program:
make grants available year-round, limit Pell Grant eligibility to the equivalent of 16
semesters, eliminate the tuition sensitivity rule, and allow Pell recipients in the military to
be classified as independent.
21 For additional information regarding the Pell Grant program shortfall, see CRS Report
RL31668, Federal Pell Grant Program of the Higher Education Act: Background and
Reauthorization, by Charmaine Mercer.

CRS-22
most recent authorized maximum of $5,800, the estimated program costs would
increase by more than $7.5 billion.
Increasing the maximum Pell award would also increase the number of eligible
participants by nearly 12%, while changing somewhat the distribution of participants
among dependency groups. More specifically, if the appropriated maximum Pell
Grant were increased, the representation of each dependency group would change.
Dependent recipients represent slightly less than 40% of all Pell recipients under
current law; the percentage would increase to nearly 42% if the maximum award
were increased to $5,800. Independent recipients with dependents would witness a
decrease in their representation among all Pell recipients if the maximum award were
increased. Under current law they make up 42% of all Pell recipients, however, this
would decrease to 39% if the maximum award were increased to $5,800.
Closer examination of each dependency group reveals that only recipients with
the highest family incomes — over $60,000 for dependent recipients, $20,000 for
independent recipients with dependents, and over $13,000 for independent recipients
without dependents — would increase their percentage share of all Pell Grant
recipients if the maximum award were increased. Within this “high-income” group,
the representation would increase by 2.1 percentage points for independent recipients
with dependents (48.4% to 50.5%) and by 10.3 percentage points for independent
recipients without dependents (15.4% to 25.7%), if the maximum Pell award were
increased from $4,050 to $5,800.
Finally, the analysis reveals that an increase in the appropriated maximum Pell
Grant greatly increases the amount of the average Pell award for the lowest-income
recipients in each dependency group. Recipients with the lowest family incomes
would have the largest average Pell award under each selected increase in the
maximum Pell Grant. Further, dependent recipients in the lowest-income group
would have a higher average Pell award, in each scenario, than both groups of
independent recipients with family incomes in the lowest group.
The average Pell award of individuals in the highest family income group would
increase by a greater percentage than for recipients in the lowest-income group, even
though the amounts of the awards for the former would be lower. Both groups of
independent recipients in the highest family income group would experience the
greatest percentage increase in their average Pell award if the maximum award were
increased from $4,050 to $5,800. Independent recipients with dependents would
increase their average award by 51% and the average award for independent
recipients without dependents would increase by 80% over the amount of the average
award under current law. For dependent recipients, individuals with family incomes
in the second to the highest-income group would experience the greatest percentage
increase in their average Pell award if the maximum Pell award were increased to
$5,800. This group’s average award would increase by 56% over the average award
under current law.