The Current Status of the Pell Grant Program: Limiting or Opening Access to Higher Education?

Jayanti Owens '06

Since it was created in 1973 as a part of the Johnson Administration's War on Poverty program, the Pell Grant has been the largest federal financial aid program for higher education.  It was created with the intention of making higher education possible for the neediest students, the majority of whom would not pursue higher education without the financial assistance. Indeed, over the past three decades federal and state-level policy efforts to make higher education more affordable for low-income[i] and so called "at-risk" students have led to increases in college participation rates for all students over the last several decades. None the less, only 31% of students in the lowest family income quartile in the United States enter college, as compared to the 85% who enter from the highest quartile.[ii]  The trend of limited access holds for low-income students seeking access to higher education whether they attend community colleges, public four-year institutions, or private four-year schools. While the Pell Grant budget has grown substantially under the Bush/Cheney Administration, my research shows that the neediest students are less likely to be the program's primary beneficiaries as a result of changes made to the program's target group. Treating the systematic absence of low-income students as the result of institutional discrimination might encourage different ideas about policies aimed at increasing their participation in higher education.  If the country is to make good on its promise to offer the financially neediest students higher education, involving the very people whose voices have been historically excluded from decision-making processes will be crucial.

While much evidence reveals growing income disparities, Senior Pell Institute Scholar Tom Mortenson's observations reveal its effects on the pursuit of higher education.  Mortenson finds that in 1979 a student from a family in the top income quartile was four times more likely than a student from the lowest income quartile to have received a bachelor's degree by age 24.  By 1994, the high-income student was ten times more likely than the low-income student to have received a college degree. Confirming Mortenson's study, research conducted by The Century Foundation found that, in 2004, 74% of students at the top 146 colleges in America come from the richest 25% of the population.[iii]  At public two-year colleges, low-income students comprise 20% of the student population, middle-income students[iv] 59%, and high-income students 21%.[v]  The disparity only widens at four-year institutions.  At public four-year and private four-year universities, just 11% and 8% of students come from low-income families, respectively.[vi] 

The implications of these statistics are more startling considering the well-researched correlation between education levels and income: people with higher educations are more likely to have higher incomes.  On average, the first significant jump in income-bracket, and the one that separates low-income from middle-income families, takes place after the successful completion of a bachelor's degree.  Although this trend is salient, it is critical to assess institutionalized discrimination not only in terms of income and other indicators of standard of living, but also in terms of the access to opportunities, educational and otherwise. 

The benefits of increased income not only include meeting (and exceeding) material needs, opportunities to choose one's career, have a sense of efficacy in one's workplace and relationships, and provide for one's family, they also include, to use Pierre Bordieu's phrase, social capital. Bordieu argues that social capital is the glue that holds societies together and is necessary to create bridges between people of different backgrounds, particularly economic, racial, and geographic.  As social capital increases, so does the breadth of social networks, a crucial piece of the puzzle in transforming economically depressed communities.  In their book The Shape of the River (1998), Derek Bok and William G. Bowen show that racial minorities who were admitted under affirmative action programs to the nation's most selective colleges and universities had higher rates of going on to graduate and professional school than did their white counterparts. Once in the work world, they had higher rates of participating in volunteer and service activities than did their white counterparts. Clearly, more democratic access to education has ripple effects throughout communities, increasing not only the social glue but the feasibly that all people benefit from the effects of a more democratically available system of higher education.

While important, financial aid must, however, be combined with the bridging social capital developed through the sustained creation and growth of "student outreach and support programs"[vii] in order to increase the number of students benefiting from education and the quality of impact of federal aid.  Lawrence Gladieux explains: financial aid alone is "insufficient condition for achieving the goal of equal opportunity. Access is not enough, nor is financial aid. To lift student aspirations and readiness of students for post-secondary education, complementary approaches are required. In sum, we need a much wider and deeper societal commitment to reaching, motivating, and preparing low-income students for college—and assuring that price is not a barrier."

The federal government's TRIO Programs—including Upward Bound, Student Support Services, Student Talent Search and Gear Up—for example, are significant because they target "at-risk" and financially disadvantaged youth and their families in a sustained way beginning in elementary school and continuing through high school. (TRIO no longer represents an acronym but is now shorthand for Educational Opportunity for Low-Income and Disabled Americans.) These programs provide social and intellectual capital by increasing awareness of federal aid programs, a clear understanding of how they work, and encouragement along the way for low-income students, their families, and their communities to persevere, stay focused on academic success, and assume they will continue with higher education.  Funding for TRIO programs, however, was decreased by 56% in the FY2006 budget. 

Proponents of the shift in Pell Grant eligibility to help defray costs for lower-middle and middle-class students argue that the program has not actually eliminated access for any low-income students in the process of expanding access to middle-income students. For example, John Boehner, Republican Congressman from Ohio and Chairman of the Committee on Education and the Workforce, argues that the shift represents an expansion of the overall Pell Grant Program (press release August 2, 2002).  He and his colleagues emphasize the merit in moving towards more universal (increased) eligibility policies that help more middle-income people, and often increase voter support.  Their language has undergone a subtle shift from "the neediest students" to "students from low- and moderate-income families."  While it is true that the Bush Administration has increased its funding of the Federal Pell Grant program in absolute terms, the overall impact of the Federal Pell Grant program in allaying individuals' costs for higher education is dwindling.  Especially with increases in funding for federal education tax breaks and state tuition subsidies, coverage for higher educational costs is not targeting low-income populations in high-impact ways.  Furthermore, crucial educational support programs and subsidiary loan programs are being cut or decreased in funding.  Therefore, the impact of the grants has suffered, which hurts the neediest students.  Part of this is due to significant annual increases in college costs, particularly at four-year private institutions. But the result remains that higher education is now even less affordable for lowest-income students—many of who may not go to college at all if federal aid cannot cover a substantial portion of higher education costs. 

The Pell Grant authorization legislation sets the Program up to function as an entitlement program, meaning that all students who qualify for the aid based on economic need will receive due amounts of aid [viii].  However, Pell Grant awards are disbursed on an annual-basis, meaning that every year, Congress designates a certain amount of educational funding for Pell Grants based on predictions of the number of students who will qualify for Pell Grants that coming year.  This means that the program falls into deficit if it funds the full amount for which each student qualifies.  Until 2002, Pell Grant expenditures consistently surpassed the amount appropriated by Congress for that fiscal year.  As a result, the deficit of $4.3 billion that has accumulated in past years has been integrated into the budget for FY2006.[ix]  There are two significant implications.  First, although the Bush Administration emphasizes its increases in Pell Grant funding in FY 2006, the reality is that the increases are much more modest than they seem.  Almost 25% of the $18 billion appropriated to the Pell Grant program will go to paying back the $4.3 billion deficit.[x]  Second, the increase does not mean that more money will be available to each student as a result of the modest increase left over once the deficit has been paid back.  Rather, the increase is what is necessary in order to keep funding the program at its current level per individual given the projected growth for FY 2006.[xi]  Pell Grant expenditures have been increasing by approximately $2 billion annually.[xii]  The real increases in Pell Grant appropriations is, therefore, almost zero in terms of the size of the average award that will be granted to individuals in the coming year. 

In his FY 2006 budget for aid to higher education, President Bush called on Congress to raise the maximum Pell Grant award by $500 over the next five years—a $100 increase per year, meaning that, by 2010, the maximum Pell award will have increased from $4,050 to $4,550.[xiii]  However, in increasing the new (theoretical) maximum Pell award, lawmakers are considering "raising the amount that students in their first two years of college can borrow from the government's direct-and guaranteed-student-loan programs."[xiv]  First, this shift towards increasing loans and only 'theoretically' increasing the maximum Pell award increases the amount of debt students must carry.  This is particularly problematic considering that debt concerns are often what deter low-income students who would be taking a chance in pursuing higher education.  Many of the neediest students are afraid to take on extensive loans since they do not know they will be able to get a high-paying job afterwards and often lack access to leverage social capital, such as by relying on their parents to fund them after graduation.

Second, while loan components in federal aid are increasing, the Perkins Loan Program is being cut in order to help pay for the increases being made to the Pell Grant.  The proposal would "require colleges to return the federal share of the money they use to make new Perkins Loans to students from low- and middle-income families."[xv]  This is troublesome considering that colleges made $1.263 billion in Perkins Loans from federal aid, allowing them to loan an average of $1,875 to 673,000 student-borrowers in 2004.[xvi]  It is also relevant to note that, in light of the complete cuts of major support programs, such as TRIO, it was politically necessary to maintain funding for a program as large as the Pell Grant, which is known as the staple of higher education federal aid.  Cynthia A. Littlefield, director of federal relations for the Association of Jesuit Colleges and Universities, characterizes the shrinking of Perkins for the benefit of Pell this way:  "Eliminating one critical student-aid program to finance another is not good policy."[xvii]

Even with funding increases to the already-modest average Pell Grant, the amount of grant aid a student whose family earns less than $25,000 annually receives has decreased since its high point in the 1970's.  This fact is particularly problematic because most higher education costs continue to increase faster than the rate of inflation.  In the mid 1970's, the average rate of award covered approximately 85% of expenses at public, four-year institutions.[xviii]  The fact that, by 2001, Pell Grants accounted for only, on average, 40%[xix] of the costs of public, four-year institutions only further supports Mortenson's claim regarding the decreasing impact of Pell Grants. 

Additionally, unless Congress passes its most generous minimum wage bill in history (an unlikely probability), the average income of families in the lowest quintile will not increase enough to compensate for increases in educational costs.  The year 2000 Status Report on the Pell Grant revealed that: "The income of families in the lowest quintile has been essentially flat since the early 1970's; between 1973 and 1998 (the last date for which these figures are available), the average income of these families decreased by .5 percent.  The income of families in the middle quintile also experienced little income growth until the late 1980's, when average income began to rise.  Over the history of the Pell Grant program, middle-income families have seen their average income increase by 11 percent in inflation-adjusted terms.  Only upper-income families have experienced dramatic income growth.  Since 1973, the average income of families in the highest quintile has grown by 43 percent in inflation-adjusted terms.  Because their income has not changed, low-income families have been hardest hit by increases in college prices."[xx]  While it's clear that any increases in educational funding have positive effects for the persons they benefit, many of the highest-risk, neediest students, unlike most middle-class students, are not likely pursue higher education if programs like the Pell Grant will not cover a larger percentage of educational costs. 

Given steeply rising costs for higher education, pending changes to federal aid programs, and increasing socio-economic disparities in access to higher education, it is particularly critical for Congress to re-examine the mission of the Pell Grant and who it targets. Mortenson minces no words when characterizing the situation: "We have not only failed to achieve equality of higher educational opportunity, but the gains made in the 1970's have been completely erased in the 1980's and 1990's[... B]y the 1990's we have achieved greater inequality of higher educational attainment than has existed at any time in the last 25 years of reported Census data."[xxi]

It is imperative that educational opportunities target the neediest students in particular who are not likely to pursue higher education without federal support programs and aid.  Support and aid programs must be actively visible and transparent and not only sustained, but increased in funding in order to be successfully implemented and effective.  In The Shape of the River (1998), Bok and Bowen discuss the myriad contributions made by poor Americans and Americans of color who are college graduates. They argue eloquently for the need to engage the people whose voices have been left out of discussions on how to increase access to higher education.  This country "cannot ultimately succeed as a democracy if we fail to close the gaps in opportunity that continue to be associated with race [and socio-economic class]."[xxii]  The shifts in eligibility for the Pell Grant Program towards middle-income students means that it is particularly crucial that Congress consider the ways in which the federal government's largest student financial aid program for higher education is losing sight of the original mission and purpose for which it was created.  It is by addressing the ways in which discrimination is institutionalized at a deep-seeded level in policies and structures that systematically disadvantage students that we can effectively create access to opportunity for all people. 


[i] Throughout this paper, the term 'low-income' will refer to families whose income is less than $25,000/year.

[ii] Education OPPORTUNITY and U.S. Census Bureau, 2001

[iii] "An affirmative-action policy based on class, not race."  The Seattle Times.  9 February, 2005.

[iv] 'Middle-income' refers to students whose families earn between $25,000 and $74,999 annually

[v] "Income Gap Impacts Higher Education."  Council for Opportunity in Education.  21 Sep. 2004.  Online at:

[vi] Ibid. 

[vii] Gladieux, Lawrence.  "College Opportunities and the Poor: Getting National Policies Back on Track."  Princeton, New Jersey: The College Board and The Center for the Study of Opportunity in Higher Education, Washington D.C., 1996.  

[viii] Determination of need is in itself a controversial topic because many critics argue that the tables used to calculate need themselves undermine the actual need of a family and overestimate the Estimated Family Contribution (EFC) component of the aid package.

[ix] "Budget of the United States Government: FY2006."  Online at:

[x] National Associated of State Universities and Land-Grant Colleges.  "Fiscal Year 2006 Budget Summary (Part I)."  Online at:  Accessed 16 May 2005.

[xi] "Budget of the United States Government: FY2006."  Online at: Accessed 16 May 2005.

[xii] Ibid.

[xiii] Ibid.

[xiv] Burd, Stephen.  "Bush Proposes Increase for Pell Grants: But the president's spending plan cuts loan program and services for needy students."  The Chronicle of Higher Education.  February 18, 2005.  Page A21.

[xv] Ibid.

[xvi] Ibid.

[xvii] Ibid.

[xviii] Ibid. Page 4.

[xix] Ibid.

[xx] King, Jacqueline E.  "2000 Status Report on the Pell Grant Program."  Washington, D.C.: American Council on Education, 2000.  Page 12.

[xxi] Mortenson in Gladieux, 1996, Page 8.

[xxii] Bowen, William G. and Derek Bok.  The Shape of the River: Long-Term Consequences of Considering Race in College and University Admissions.  Princeton: Princeton University Press, 1998.

This paper is an abbreviated version of a chapter of a senior thesis, which was informed by Professor Reeves' Political Science 106:  American Polity and Urban Policy.  Jayanti Owens is a senior majoring in Political Science-Educational Studies through the honors program with a course major in Sociology/Anthropology.