Pell Grant gets the biggest boost in more than a decade

Low-income college students can get an additional $500 from the federal government to help pay their education bills later this year.

The extra money is due to a significant increase in funding for the Pell Grant program in the 2023-24 academic year as part of the $1.7 trillion spending bill recently enacted into law.

The Pell Grant usually increases slightly each year, but grants for the next academic year will increase by $500, the largest percentage increase in nearly 15 years, says Anika Van Eaton, vice president of policy at uAspire, a nonprofit organization of profit that helps students find accessible university pathways.

What it boils down to: A student eligible for the maximum Pell Grant will receive $7,395 in 2023-24, up from $6,895 this year.

“We are very excited about the growing investment in Pell Grants,” says Van Eaton. “It will make a substantial difference to students.”

The push, which goes into effect July 1, comes on the heels of a $400 raise for the current academic year. That additional $900 for Pell-eligible students this fall is great news, according to the National College Attainment Network (NCAN).

“At a time when Congress struggles to agree on many critical issues, we can celebrate the shared belief in the value of education beyond high school for those who are struggling to afford it, disproportionately students of color and first-generation Americans.” Kim Cook, CEO of NCAN, said in a press release last month.

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To start

What is a Pell Grant and who receives it?

Created in 1972, the federal Pell Grant is a type of needs-based financial aid provided by the United States Department of Education to eligible college students. (Not available to graduate students.)

More than 6 million students received a Pell Grant in 2020, making it the largest grant program offered by the Department of Education. Recipients can invest Pell dollars in tuition, fees, housing, food, and other educational expenses, such as books or a computer. To access the scholarship, students (and their parents if they are dependent students) must complete the FAFSA.

The majority of Pell grants go to low-income students whose families make less than $40,000, about 78%, according to the National Association of Student Financial Aid Administrators (NASFAA). And many go to students of color: nearly 60% of black students and over 40% of Hispanic/Latino students receive the scholarships. The Pell Grant also helps about half of first generation college students and students’ parents, as well as 40 percent of veteran students.

These grants are awarded on a sliding scale, ranging from $692 to $6,895 for the current academic year. Several factors from the FAFSA are used to calculate a student’s eligibility, including a student’s expected family contribution, the cost of institution, and whether the student is attending full-time or part-time, Van Eaton says.

The purchasing power of the Pell Grant

If you went to college and received a Pell Grant when the program was new, you may recall that it covered the lion’s share of your expenses at your local university. In the 1970s, the maximum Pell Grant covered about 79 percent of annual costs for residents at a 4-year public university, according to Van Eaton. It now covers only 30% or less of the same education.

That’s because as states have divested from higher education over time—one study found that state support has declined 50 percent since 1981—families have had to bear a larger share of the rising cost of higher education. The Pell Grant, with existing federal funding, is unable to keep pace with inflation and the expected share of spending for households today.

Is this Pell Grant increase enough?

Higher education experts agree that the 2023-24 Pell Grant increment is exciting, and they are grateful for it.

“This investment in Pell (is) a big win for students,” says Raymond AlQaisi, senior manager of policy and defense at NCAN. Even so, NCAN and 1,200 other organizations believe it is necessary to double the Pell Grant to $13,000 to make higher education more feasible for low-income students. They launched a national campaign, Double Pell, advocating for the increase.

According to AlQaisi, the new high of $7,395 covers about a third of the average cost of public university attendance, which is comparable to more than a decade ago.

“This is good progress toward NCAN’s goal of restoring the purchasing power of the Pell Grant to [covering] half the average cost of attending a degree at a state-owned institution,” she says. But more funding is needed to restore the Pell to its historic strength.

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