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Two Pell Grant Pathways Proposed in College Board Report

A study group convened by the College Board to examine the future of Pell Grants has proposed splitting the federal aid program for low-income college students in two to simplify and better serve students of different ages.

Under the recommendations of the Rethinking Pell Grants report released today, Pell Y would be designed for younger undergraduate students and Pell A for adults 25 and older.

To ease the application process, Pell Y eligibility would be based on adjusted gross income and family size. Simple tables would allow students to predict their aid awards well in advance of applying for aid, and a formula would award the maximum grant (currently, $5,550) to applicants with incomes below a certain level, such as the poverty line.

Complexity in the financial-aid application process creates a barrier for many students and a more predictable, transparent process is needed, according to the report, which was funded by the Bill & Melinda Gates Foundation and the Lumina Foundation. [Both foundations provide funding to Educations Week .] Now, to qualify for Pell Grants, families must complete the Free Application for Federal Student Aid, and many who could benefit do not apply. Changes recommended by the study group would change eligibility for the program so funds would be more targeted on students from the lowest-income families.

Estimates suggest the proposed Pell Y formula would not have to change the cost of the Pell Grant program for students 24 and younger. Students from higher-income families who now receive Pell Grants, usually because they have a sibling in college at the same time, would lose eligibility, the report notes.

While the Pell Grant program, established in the early 1970s, was designed for young people from low-income families, it has become the primary source of grants for adults trying to enhance their workforce skills. "Too many older students enroll in programs with low completion rates and end up with little more than debt and lost time to show for their investments—and for the subsidies they have received," the report states.

The study group proposes that for Pell A students, eligibility for Pell Grants should not be based on the traditional need-analysis system. To encourage students to find cost-effective programs, their grants should not be a function of the price of the programs they select. To qualify for Pell A Grants, adults would apply once at the beginning of their programs. The award amounts would be based on the number of credit hours, and students would continue to receive funding as long as they made adequate progress in their programs.

With both Pell Grant Y and Pell Grant A programs, students would be able to use their Pell funds at their own pace, registering for as many credits and as many terms per year as is appropriate for them.

The report also recommends the federal government supplement the Pell Grant program by opening college accounts for 11- or 12-year-olds whose parents' financial circumstances would make them eligible for Pell Y Grants if they were college age. Children would receive annual deposits equal to 5 percent to 10 percent of the Pell Y Grants for which they would be eligible if they were enrolled in college.

The College Board study group did not venture into issues of Pell Grant funding levels, but focused instead on structural proposals to address the long-term sustainability of the program. The 14-member group of experts in higher education, finance, student aid, workforce development, college administration, and policy analysis was chaired by student financial-aid expert Sandy Baum.

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