Higher Education Grant Programs
Pell Grant Program
In the original version of the Higher Education Act of 1965, the federal government only offered funding for campus-based grant programs. Thus, students relied on limited institutional grant funds. But the 1972 reauthorization of the HEA authorized the Basic Educational Opportunity Grant Program, later renamed the Pell Grant Program in 1980 after Senator Claiborne Pell (D-RI). Pell Grants are awarded directly to the financially neediest undergraduate students, and the grants are transferable between institutions. Amounts received are based on a federal needs analysis formula.
For the 2007-2008 school year, $13.8 billion is appropriated for Pell Grants, and the maximum grant an individual student can be awarded is set at $4,310. The average Pell Grant per recipient is an estimated $2,641. Grant amounts are determined based on the student’s expected family contribution (EFC), the cost of attendance of the chosen university or college, and the student’s enrollment status. EFC is calculated using a standard formula that draws financial information from the Free Application for Federal Student Aid (FAFSA).
In Fiscal Year 1976, the first year that the Pell Grant program was fully funded at its authorized level, the maximum Pell Grant was $1,400 and covered 72 percent of the cost of attendance at a typical four-year public college. The purchasing power of the Pell Grant has sharply decreased over the past 30 years as the price of college has steadily risen. In 2006, the maximum Pell Grant covered only 33 percent of the cost of attendance at a typical four-year public college.
Academic Competitiveness Grants (ACG) and National Science and Mathematics Access to Retain Talent (SMART) Grant Programs
Academic Competitiveness and SMART Grants are relatively new direct grants available to Pell Grant recipients in addition to their Pell Grant awards. They were established by the Higher Education Reconciliation Act of 2005 as part of President Bush’s "American Competitiveness Initiative" and took effect in 2006.
Academic Competitiveness Grants are given to low-income first and second year undergraduate students who complete a "recognized rigorous secondary school program of study." Students must take and pass a specific set of college preparation courses in high school, as selected by each state and approved by the Department of Education, or complete two Advanced Placement or International Baccalaureate courses and pass the accompanying exam. A first-year undergraduate can receive up to $750 in ACG aid and a second-year undergraduate can receive up to $1,300. An estimated 435,000 students will receive ACG aid in the 2007-2008 school year at a cost of $405million.
SMART Grants are available to low-income third and fourth year undergraduate students majoring in engineering, mathematics, science, technology or high-priority foreign languages. Eligible students must maintain a cumulative GPA of 3.0 or higher. SMART Grants provide up to $4,000 for each of the third and fourth undergraduate years. An estimated 110,000 students will receive SMART Grants in the 2007-2008 school year, at a cost of $455 million.
Federal Supplemental Educational Opportunity Grant (SEOG) Program
The SEOG Program provides federal funds for need-based grants directly to approximately 4,000 participating institutions of higher education. The government uses a statutory formula to determine how much each institution receives, and then universities and colleges are required to contribute institutional funds equivalent to 1/3 of the federal allocation. In contrast to Pell Grants and student loans, SEOG grants are campus administered. Recipient institutions have flexibility in deciding how to distribute the funds as long as they prioritize students with exceptional financial need. Students are typically awarded grants ranging from $100 to $4,000 per year, with the average award being $756 per year. The number and level of grants depends on the availability of funds at each school. For the 2007-2008 school year, the program has been funded at $771 million.
Funding for Low-Income and Minority-Serving Institutions
Title III of the Higher Education Act of 1965 provides funds directly to institutions of higher education that serve low-income and minority students. Approximately $420 million was made available for these initiatives in fiscal year 2007. Title III funds can be used by relevant institutions to improve academic quality through staff or curricula development, support administrative improvements, or expand fiscal capacity, for example by establishing endowment funds. Other activities such as construction, infrastructure improvement, and student services are also supported by Title III funds.
Institutions must demonstrate that they support low-income or minority students in order to be eligible for Title III funds. Title III, Part A aid generally goes to institutions at which a large percentage of the student body receives a Pell Grant or other need-based federal aid. A portion of Part A funds are also set aside for American Indian Tribally-Controlled Colleges and Universities. Title III, Part B aid is specifically for Historically Black Colleges and Universities. Hispanic-Serving Institutions can receive similar competitive grants under Title V of the Higher Education Act.
