Jason Delisle and Cody Christensen devote an American Enterprise Institute report to problems associated with the Pell Grant program’s growth.

The federal Pell Grant was designed to help low-income students pay for college. But over the past two decades, a growing share of middle-income students have become eligible for the program. This was not policymakers’ explicit goal.

The change appears to have happened inadver­tently and gradually. Eligibility for a Pell Grant is pri­marily based on the size of the maximum grant that the program awards, and there is no absolute income cut­off. If lawmakers increase the maximum grant more quickly than inflation—which they have on average over long periods of time—then more middle-income families become eligible for grants. In 1995–96, a dependent student from a three-person family earn­ing the equivalent of $60,000 today would not have qualified for a grant; today the student receives more than $1,000 through the program. …

… Many advocates call for restoring the value of the Pell Grant to cover the same share of college prices today as it did in the mid-1970s. They argue that this would help more low-income students attend college and reduce debt burdens.

What they do not say is that such a change would also transform the Pell Grant program into a generous benefit for middle-income and even upper-income households. Eligibility is based on a sliding scale that incorporates the maximum grant size rather than on absolute income limits; as the maximum grant rises, students from families with incrementally higher incomes become eligible.