President Obama's Pell Grant Proposals

on May 16, 2016

President Obama has proposed two improvements to the Federal Pell Grant program in the FY2017 budget request. The changes are aimed at increasing the rate of on-time and accelerated degree attainment by low-income students.

  • Pell for Accelerated Completion would resurrect the year-round Federal Pell Grant program, allowing students to receive Federal Pell Grants for summer classes. Unlike the previous version of this program, which ended in 2011, the new year-round Federal Pell Grants would be limited to students who are enrolled full-time. (Generally, students who are enrolled half-time are half as likely to graduate as students who are enrolled full-time.)
  • On-Track Pell Bonus would reward Federal Pell Grant recipients who take 15 credits per semester instead of 12 with an extra $300. Current rules treat 12 credits a semester as full-time enrollment. But, students who want to graduate in 4 years need to take 15 credits a semester.

About 700,000 students would benefit from the expanded Federal Pell Grant program.

The Pell proposals seem to be gaining bipartisan support, in part because the $2 billion/year increase in the cost of the Federal Pell Grant program is relatively low and the program has a budget surplus.

Given that Bachelor’s degree recipients pay more than twice as much federal income tax, on average, as high school graduates, the increase in graduation rates would likely pay for the increased cost.

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