A r c h i v e d  I n f o r m a t i o n

Biennial Evaluation Report - FY 93-94

Chapter 501

Federal Pell Grant Program

(CFDA No. 84.063)

I. Program Profile

Legislation: Higher Education Act (HEA) of 1965, Title IV, Part A, Subpart 1, as amended (20 U.S.C. 1070a) (expires September 30, 1997).

Purpose: To help financially needy undergraduate students meet the costs of their education at participating postsecondary institutions by providing direct grant assistance.

Funding History

Fiscal Year Appropriation Fiscal Year Appropriation
1973 $ 122,100,000 1987 $4,187,000,000
1975 840,200,000 1988 4,260,430,000
1980 2,l57,000,000 1989 4,483,915,000
1981 2,604,000,000 1990 4,804,478,000
1982 2,419,040,000 1991 5,375,502,000
1983 2,419,040,000 1992 5,502,855,000
1984 2,800,000,000 1993 6,461,970,000
1985 3,862,000,000 1994 6,633,566,000
1986 3,579,716,000

II. Program Information and Analysis

Performance Indicators

An important indicator of the Federal Pell Grant Program's performance in assisting needy postsecondary students is the targeting of Federal Pell Grant awards. The following table shows one measure of targeting: the percentage of dependent and independent postsecondary students who received Federal Pell Grants by income category.1 As shown, 65 percent of dependent low income students and 62 percent of independent low-income students received Federal Pell Grants in 1990, a far greater percentage than in the middle-or high-income categories. Among dependent students, a larger percentage benefited from the program in 1990 than in 1987 in both the low-and middle-income categories. Independent low-income students showed a decline in the percentage of students receiving awards, but the percentage of middle-and high-income students receiving awards increased.


1Income categories are defined by income quartiles: low income students fall in the lowest quartile of the income distribution, high income students fall in the top quartile, and middle income students fall in the middle two quartiles of the income distribution.

Table 1

Percentage of Full Time Postsecondary Students Receiving Pell Grants, Academic Years 1986-87 and 1989-90

1986-87 1989-90
Dependent 17 19
--Low income 55 65
--Middle income 6 11
--High income 1 0
Independent 48 48
--Low income 72 62
--Middle income 43 47
--High income 2 14

Source: III.4.

Population Targeting and Services

Federal Pell Grants are available to undergraduate students enrolled in a degree or certificate program at an eligible institution. Students must have a high school diploma or its equivalent or pass an examination prepared by the Secretary to demonstrate ability to benefit from the training offered by the institution. Students must also demonstrate financial need based on the cost of education and the ability of the student, or student and family, to pay this cost. The calculation of this ability to pay is based on a Congressionally specified formula applied to the financial data of the student, or student and family. The 1992 Reauthorization of the Higher Education Act established a single formula for determining eligibility for all Title IV student aid programs.

Participation: 4.0 million students received Federal Pell Grants averaging $1,543 in the 1992-93 award year (see Table 2). This represents an increase of 29.6 percent in the number of recipients since 1985-86 (III.1).

Table 2

Selected Statistics on the Federal Pell Grant Program 1985-86, 1990-91, 1991-92, 1992-93 Academic Years

1985-86 1990-91 1991-92 1992-93
Number of applicants 5,627,131 7,138,940 7,775,216 8,248,141
Number determined eligible 3,710,933 4,507,984 4,941,079 5,243,139
Number of recipients 2,813,489 3,404,810 3,786,230 4,002,045
Total awards
(in thousands of dollars)
$3,597,380 $4,935,191 $5,792,703 $6,175,902
Average (in dollars) $1,279 $1,449 $1,530 $1,543

Source: III.1.

Distribution By Sector: In 1992-93, 6,401 institutions were participating in the Federal Pell Grant Program, virtually unchanged from the 6,434 institutions in 1991-92. These counts refer to main campuses. If branches are included, the numbers are 8,867 in 1992-93 and 8,734 in 1991-92, an increase of approximately 1 percent. Nearly half (49 percent) of these were proprietary (private, for-profit) schools, with the remainder divided almost equally between public and private nonprofit institutions (III.2).

Table 3 shows the distribution of award amounts for public, private nonprofit, and proprietary institutions. Students at proprietary institutions receive almost one-fifth of Federal Pell Grants (21 percent). The proprietary share grew from 21 percent in 1984-85 to about 27 percent in 1987-88, but has fallen back to 21 percent in 1991-92. There was a decline in the share of Federal Pell Grant recipients from private nonprofit institutions from 23 percent in 1984-85 to 20 percent in 1991-92. The funding share of public institutions has remained stable, the change from beginning to end of the period being less than 3 percent.

Table 3

Percentage Distribution of Federal Pell Aid by Type of Institution
Award Years 1984-85 to 1992-93

Award Year Public Private Nonprofit Proprietary
1992-93 62.1 19.5 18.4
1991-92 59.6 19.5 20.9
1990-91 57.9 19.7 22.4
1989-90 56.9 20.0 23.1
1988-89 55.4 20.2 24.4
1987-88 53.3 20.1 26.6
1986-87 54.4 20.8 24.8
1985-86 55.8 22.0 22.2
1984-85 56.2 22.9 20.9

Source: III.1, III.2, III.3.

Distribution By Dependency Status: As shown in Table 4, the proportion of aid awarded to independent students is increasing. In 1984-85, independent students received 48.6 percent of all awards and 49.3 percent of the total amount awarded, but by 1992-93, the independent student share had risen to 62.1 percent of awards and 63.3 percent of the total amount awarded. Among independent students receiving Federal Pell Grants in the 1992-93 award year, 78.8 percent were older than 22 years of age, while among dependent recipients only 4.8 percent were over 22 years old (III.1).

Table 4

Percentage Distribution of Federal Pell Aid by Dependency Status
Award Years 1984-85 to 1992-93

Award Year Number of
Awards to
Independent Students
Number of
Awards to
Dependent Students
Amount of
Awards to
Independent Students
Amount of
Awards to
Dependent Students
1992-93 62.1 37.9 63.3 36.7
1991-92 61.5 38.5 62.6 37.4
1990-91 60.5 39.5 61.9 38.1
1989-90 59.0 41.0 60.3 39.7
1988-89 57.9 42.1 59.4 40.6
1987-88 57.5 42.5 57.9 42.1
1986-87 53.9 46.1 54.9 45.1
1985-86 50.4 49.6 51.2 48.8
1984-85 48.6 51.4 49.3 50.7

Source: III.1, III.3.

Distribution By Income: The Federal Pell Grant Program serves predominantly lower-income students: 67 percent of all Federal Pell Grant recipients had incomes of $15,000 or less in the 1992-93 award year (for dependent students, their parents' income; for independent students, their own income) and 92.5 percent had incomes not exceeding $30,000 per year (approximate national median family income).

Additional breakdown of awards by family income is shown in Tables 5 and 6 for dependent and independent students. Note that the average award declines as income increases. Within a specific income category, the average independent award is actually lower than the average dependent award, but overall this is reversed because independent students are so heavily concentrated in the lowest income (highest average award) group. Nearly half (43.6 percent) of independent recipients were in this group while only 14.7 percent of dependent recipients were.

Table 5

Percent Distribution of Federal Pell Awards for Dependent Students by Family Income
1992-93 Award Year

Dependent Students
0 to $6,000 $6,001 - $9,000 $ 9,001 - $15,000 $15,001 - $20,000 $20,001 - $30,000 $30,001+ Total
Percent Distribution of Recipients 14.7 9.7 19.3 15.9 24.8 15.6 100.0
Percent Distribution of Aid 18.3 12.0 23.2 17.0 20.5 9.0 100.0
Average Award $ 1861 1857 1802 1599 1239 868 1498

Source: III.1.

Table 6

Percent Distribution of Federal Pell Awards by Income for Independent Students
1992-93 Award Year

Independent Students
0 to $6,000 $6,001 - $9,000 $ 9,001 - $15,000 $15,001 - $20,000 $20,001 - $30,000 $30,001+ Total
Percent Distribution of Recipients 43.6 19.5 18.1 7.7 8.5 2.5 100.0
Percent Distribution of Aid 48.7 21.0 16.6 6.9 5.8 1.1 100.0
Average Award $ 1752 1689 1435 1409 1067 675 1571

Source: III.1.

Program Administration

Students applying for Federal Pell Grants submit a Free Application for Federal Student Aid approved by the Secretary which is processed for the Department of Education under contract with several data entry and processing organizations. The student is notified of his or her eligibility for assistance through the Student Aid Report (SAR). Copies of the SAR are sent to the student who forwards them to institutions at which the student wishes to apply. By law, the Department is also required to send the student's data and the results of that data analysis to the institutions that the student indicates on his or her application. The institutions calculate the student's award based on a formula defined in the authorizing statute. Institutions then report to the Department of Education on all Federal Pell Grant funds distributed to students enrolled at the school. Data on applicants and recipients are maintained by the Department through a contractor. The contractor provides data tapes and reports as required to monitor the operation of the program.

Outcomes

Analyses of data for academic year 1989-90 from the National Postsecondary Student Aid Study (III.4.) indicates that participation in the Federal Pell Grant Program varies by dependency status and income. Table 7 shows that overall, one fifth of all students -- 18 percent of dependent students and 23 percent of independent students -- received a Federal Pell grant. Proprietary school students were most likely to receive a Federal Pell Grant and students at public 2-year institutions least likely. This relationship held for both dependent and independent students at all income levels.

Over 60 percent of all dependent students with family incomes less than $10,000 a year received Federal Pell aid. This percentage declines sharply with increasing income. Only four percent of all dependent students with family incomes over $30,000 a year received Federal Pell aid. Almost half of the independent students with incomes under $10,000 a year participated in the Federal Pell Grant Program.

The Integrated Quality Control Measurement Project was conducted to measure the quality of awards in the 1988-89 award year under the major Title IV programs (Federal Pell, Campus-Based, Stafford Loans). The report was released in April 1991, and found that $481 million (approximately 9.9 percent) of Federal Pell funds were awarded in error including under-and over-awards. About 28 percent of Federal Pell Grant recipients had award errors exceeding $50 (III.5).

Table 7

Percentage of Students Participating in the Federal Pell Program
1989-90 Award Year

ALL TYPE OF INSTITUTION STATUS
2-YR. PUB. 4-YR. PUB. PRIV. PROP. FULL-TIME PART-TIME
ALL 20.4 12.8 20.8 23.6 52.0 30.2 8.7
DEPENDENT 17.7 11.2 17.7 21.8 40.8 21.1 8.1
INCOME
UNDER $10,000 60.5 46.1 63.5 66.8 77.5 68.1 37.8
$10,000-$29,999 30.7 14.7 35.2 44.8 48.7 38.6 9.5
$30,000 & OVER 4.0 2.4 4.2 5.1 9.0 4.8 1.8
INDEPENDENT 23.0 13.7 26.3 27.1 57.2 47.5 9.0
INCOME
UNDER $10,000 45.3 31.4 46.2 53.8 70.3 60.7 23.6
$10,000 & OVER 11.5 7.2 12.3 13.9 40.2 31.5 4.9

Source: III.4.

NOTE: A percentage of participation is for each grouping of students that is described by the intersecting row and column descriptors (e.g., 63.5 % for Dependents with income under $10,000 attending 4-year Public Institutions).

Management Improvement Strategies

The Department has taken several steps to improve the accuracy of its Federal Pell Grant cost forecasts. Historically, it has been difficult to predict changes in the demand for Federal Pell Grants around economic downturns, as the chart below illustrates. As shown, during recessionary periods, forecast errors have been relatively high. In an effort to improve forecasting accuracy, the Department has organized a monthly work group to provide input on the forecasting process, has maintained better information, and has carried out a number of studies on the Federal Pell Grant Program including analyses of applicant and recipient trends and the impact of exogenous changes on applications for Federal Pell Grants. These actions are expected to improve the Department's ability to forecast costs.
graph omitted

III. Sources of Information

  1. Pell Grant End-of-Year Report, 1992-93, Division of Policy and Program Development, Office of Postsecondary Education, U.S. Department of Education.

  2. Institutional Agreement and Authorization Reports, 1983-84 to 1989-90, Division of Program Operations and Systems, Office of Postsecondary Education, U.S. Department of Education.

  3. Pell Grant End-of-Year Reports, 1983-84 to 1992-93, Division of Policy and Program Development, Office of Postsecondary Education, U.S. Department of Education.

  4. National Postsecondary Student Aid Study, 1990, National Center for Education Statistics, Office of Educational Research and Improvement, U.S. Department of Education.

  5. Integrated Quality Control Measurement Project, Findings and Corrective Actions, (Washington, DC: Price Waterhouse, Inc., September 1990).

IV. Planned Studies

  1. Repetition of the National Postsecondary Student Aid Study at three-year intervals.

  2. End-of-Year Report and technical updates of the Pell computer model will be continued annually.

V. Contacts for Further Information

Program Policy:
Fred Sellers, (202) 708-4607

Program Analysis:
Blanca Rosa Rodriguez, (202) 708-8963

Program Studies:
Kathryn Larin, (202) 401-0182

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