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.
