Proposed House Republican Changes to Pell Grants
Makes Pell Grants Harder to Qualify For, Expands How They Can Be Used
This piece follows up yesterday’s on reform of federal student loan programs by focusing on the proposed changes to Pell Grants—a key federal policy that supports students from relatively low income families. A key aspect of Pell Grants is that the subsidy they provide follows students wherever they choose to attend college, community college or other institution and that longstanding policy is continued. There are some changes to Pell Grants that would have, in aggregate, an effect of reducing the number of students who receive Pell Grants. There is also an expansion of the ability to use Pell Grants in new education and training.
Increasing the credit hours necessary to be considered a full-time student. Undergraduate students must take 15 or more credit hours (semester system), up from the current 12 hour requirement to receive a full Pell Grant. Cutoffs for quarter system are similarly restricted. Similarly, students must be enrolled half time to be eligible for a part time Pell Grant (basically redefines part time to be half time; no Pell for less than half time). At Duke, where the standard undergraduate student load is four 4 hour classes (16 hours), students can currently receive a full time Pell Grant if they take three 4 hour classes (12 hours) but that will no longer be the case.
All else equal, making full time require more credit hours is consistent with completing a degree in four years. If all else is not equal, and students eligible for a Pell Grant are also more likely to work while in school (plausible at many places but perhaps not Duke, but I have not done the research) then this could make things more difficult for low-income students. YMMV, but this nudges the incentive toward more rapid completion of a degree which I think is good.
The reason I say it is unclear if students with Pell Grants might be the one’s most likely to work during school outside of mandated need-based work study is because of the generosity of Duke’s need-based financial aid system along with the difference between offers of admission and yield (who accepts). Around half of Duke undergraduates do not apply for financial aid, and pay full price. The other half have sliding scale. The proportion of students at Duke with Pell Grants rose a great deal in the past few years (roughly 1 in 10 to 2 in 10), and that occurred at the same time that Duke expanded need based financial aid for students from North and South Carolina (this was announced in 2023, before the Supreme Courts decision, fwiw). There are many things going on and lots of them changed around the same time (2023-25). TLDR, the number of students at Duke who qualify as being from low income families as defined by Pell Grants has jumped precipitously in recent years, but it is not clear that such students would be those most likely to work a side job during school. I am devolving down into esoterica here….but these are some things to watch out for.
Reductions in number of students eligible for Pell Grants due to how income is calculated. There are two notable changes that will make fewer students eligible for Pell Grants. First, adding foreign earned income to AGI to determine eligibilty. This probably does not affect many students, but in tax year 2024, $126,500 of foreign earned income is excluded from AGI. Moving forward, that amount is added to AGI and will reduce the number of eligible students at the margin. Second, students with a Student Aid Index (SAI) that is twice as large as the maximum Pell Grant or higher, are ineligible for Pell Grants regardless of family AGI. This will have the largest effect (I think) when you have a family whose FAFSA shows low income but high assets; for example, farmland. This section (page 57 of bill, amending section [401(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1070a–1(b)(1))] is probably worth a further look, but I have not done so. One fact about SAI is that it can actually be negative, and so can show extreme need because it is not bound at zero. The policy change is at the other end of this index, and saying some with very low income but who have substantial assets, will no longer be eligible for Pell Grants.
Creates a new program—Workforce Pell Grants. This section (p. 57-67) is extremely detailed, and has written into the legislation the type of details that might commonly be determined by the Executive Branch during rulemaking (Go Article 1 branch!). The upshot is that students can use Pell Grants to enroll in vocational education training program (such as initial credential to become an apprentice electrician, or to work in a chip factory, etc.) that provides between 150 and 600 hours of instruction, over a period of between 8 and 15 weeks and when the credential offered is recognized as the credential needed to enter a particular job. This strikes me as excellent new policy intent that provides more routes for students from lower income families to use federal subsidy for education that best suits their desires and needs. Note that it does not include correspondence courses, and it involves the Governor of a state to certify that programs are reasonable opportunities for students. The Governor being involved is likely a link to workforce deals that get industries to build factories and the like. On the whole, this has a chance to not only be good education policy, but good industrial policy as well.
Updates Pell Grant Shortfalls. Pell Grants are funded partly by mandatory spending and partly discretionary and there are issues to stable funding when we have continuing resolutions as we now have for a federal budget. This moves things along per that and is something that must be done to keep the Pell Grant program fully funded.
I am going to stop there as that is the end of the Pell Grant focused content of the bill. I will return later to a series of changes that change the responsibility structure of Colleges and Universities for student non repayment of loans.