Pell Grant Costs

Gao ID: HEHS-94-215R September 28, 1994

Pursuant to a congressional request, GAO provided information on cost trends in the Department of Education's Pell Grant Program, focusing on: (1) patterns in Pell grant funding; and (2) the incremental budgetary cost of various features of the Pell Grant Program. GAO noted that: (1) Pell grant expenditures have increased in most years since 1979; (2) many applicants previously eligible for Pell grants have either lost their eligibility or received smaller awards; (3) the proportion of Pell grant aid provided to students at 4-year institutions has declined, while the proportion of aid provided to students at less-than-4-year institutions has increased; (4) the cost of increasing the maximum Pell grant amount could be $350 million in the 1995 through 1996 award year; (5) first-year students receive the largest share of Pell grants; (6) the incremental cost of providing Pell grants to students attending proprietary institutions could amount to $900 million in fiscal year (FY) 1995; (7) Pell grants to part-time students could cost approximately $500 million in FY 1995; (8) new Pell Grant provisions make it more difficult for some students to obtain financial aid; (9) family residence equity is excluded from student aid calculations; (10) Pell grants for students at institutions with high student loan default rates could cost $34 million in FY 1995; and (11) program provisions that allow for school financial aid administrators to calculate student aid could affect Pell Grant awards for about 334,000 recipients.

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