Understanding the Effects of Doubling Pell on State Grant Programs

Brief

Understanding the Effects of Doubling Pell on State Grant Programs

November 2, 2021

Abstract

Widespread concern over college affordability and student debt has generated strong support for doubling the maximum Pell grant—or at least increasing it significantly. Doubling Pell would increase the federal grant aid available to current recipients and, under the current program structure, provide aid to additional students whose incomes are too high for them to qualify at the current maximum grant level.

In this brief, we estimate the significant declines in unmet need that would result from expanding the Pell program, incorporating the current levels of state and institutional grant aid. But the design of some state grant programs leads to automatic reductions in awards for students whose federal grant aid increases. Although only a few states reduce aid in direct response to a Pell grant increase, the allocation of grant aid in many states is likely to be affected by the reduction in unmet need among Pell and state grant recipients. Colleges and universities are also likely to modify the distribution of some of their institutional aid in response to a significant increase in Pell grants.

States and institutions can take advantage of a Pell increase to recommit to their mission of supporting low-income students. They can provide need-based aid to students they are not currently funding and ensure that Pell grant increases are passed on to current aid recipients, reducing their unmet need. In response to a doubled Pell grant, institutions might also enroll and fund more students with financial need and invest additional dollars in funding programs that help guide and support students, improving their academic and postcollegiate outcomes.

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