Making ends meet
Pell Grant costs rise, US may cut recipients
As the U.S. Government attempts to pay off its $16.7 trillion deficit, discussions have turned to revising the Federal Pell Grant Program, which is aimed at helping the nation’s neediest individuals pay for college.
“It’s always good to evaluate and to make sure the Pell Grant is being targeted toward the population
it is intended for,” said Michelle Rhodes, director of Financial Aid at Grand Valley State University.
Spending on the Pell program has increased by 158 percent from 2006-2007 to 2010-2011,
according to a report released by the Congressional Budget Office (CBO).
One reason for rising costs identified by the CBO is the number of eligible recipients of the grant,
which has increased by 80 percent over the same period.
In 2006-2007, 4,347 GVSU students received $10.8 million in Pell assistance. These figures jumped
drastically by 2012-2013, with 7,744 students receiving $29.4 million disbursed by GVSU’s Financial
Aid office in Pell assistance last year. That’s a 78 percent increase in eligible recipients in just five
“The economy, lack of jobs (and) higher insurance costs have all contributed to more students being
eligible for the Pell Grant,” Rhodes said.
Another reason the CBO noted for the rising cost of the program is that the average grant award has
The maximum grant amount a student could receive in 2006-2007 was $4,050. Currently, for the
2013-2014 year, the maximum amount is $5,645.
“Under current law, a student may receive a Pell Grant if his or her EFC (Expected Family Contribution)
is 90 percent or less of the maximum grant amount,” the CBO report stated. “As the maximum is
increased and the EFC ceiling rises, students with higher EFCs (and thus less need) become eligible for
Between July 1, 2011 and June 30, 2012, the program provided $33.6 billion in grants to around 9.4
million students nationwide.
According to the CBO report, the cost of the program depends on two things: the number of recipients
in a given year, which depends on eligibility rules; and the grant amounts, which reflect the maximum
grant established by law and the program’s aid formula.
To determine who is an eligible recipient of the Pell Grant, GVSU relies on information it receives from
the Free Application for Federal Student Aid (FAFSA).
“The FAFSA information is sent to GVSU and based on information from the FAFSA, we determine if the
student is eligible for the Pell grant and other federal and institutional financial aid,” Rhodes said.
GVSU adds tuition, additional fees, room and board, cost of books and travel expenses to determine
the total cost of attendance. Then, any grants, scholarships, other loans and any work-study that the
student is receiving are summed up and subtracted from the total cost of attendance.
“The remaining figure is the ‘need’ of that individual student,” Rhodes said.
The CBO made several recommendations to reduce the Pell program’s cost, such as: tightening criteria
to be met by those eligible, or reducing the size of all grants – immediately or gradually reducing
amounts available for particular groups.
“For example, reducing the maximum grant to $4,860 in 2014–2015 would save an average of about
$7 billion annually over 10 years, whereas increasing that maximum amount to $6,400 would boost
costs by about $5 billion annually,” the CBO report stated. “A set of options that would tighten
means-testing, impose more rigorous academic requirements, and reduce the grant amounts could
cut the program’s costs in half, saving an average of about $20 billion per year, but would reduce the
number of recipients by 40 percent.”
The CBO also offered several options the government could consider to provide for low-income
students, one of which being forgivable loans.
Money would be given at the beginning of the course term as a loan. If the student drops the course,
she or he must repay it; but if the course is completed, the loan is forgiven and the student would owe
To initially be eligible for a Pell Grant, students must complete high school, obtain a GED or complete
a state-recognized homeschooling program.
However, a significant number of recipients must also enroll in remedial courses, which are designed
to bring students up to speed with college-level expectations, “and those students are less likely to
complete their coursework, thus undercutting a chief goal of the Pell Grant program,” the report
Though the Pell program may see changes in the future, students have other options to pay for
“GVSU’s financial aid budget is currently over $33 million dollars and a large portion of that goes to
needy students,” Rhodes said. “It is important for all students to file their FAFSA on time each year, by
March 1, to make sure they get the maximum amount of grant assistance available to them by the
federal government and GVSU.”