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|Public Law||Higher Education Act of 1965, Title IV, Part A, Subpart 1; 20 U.S.C. 1070a.|
A Pell Grant is money the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with financial need, who have not earned their first bachelor's degree, or who are not enrolled in certain post-baccalaureate programs, through participating institutions. The Pell Grant is named after Democratic U.S. Senator Claiborne Pell of Rhode Island, and was originally known as the Basic Educational Opportunity Grant. A Pell Grant is generally considered to be the foundation of a student's financial aid package, to which other forms of aid are added. The Federal Pell Grant program is sponsored by the United States Department of Education which determines the student's financial need. The U.S. Department of Education uses a standard formula to evaluate financial information reported on the Free Application for Federal Student Aid (FAFSA) for determining the student's expected family contribution (EFC).
The Pell Grant is covered by legislation titled the Higher Education Act of 1965 (HEA), Title IV, Part A, Subpart 1; 20 U.S.C. 1070a. These federal funded grants are not like loans and do not have to be repaid. Students may use their grants at any one of approximately 5,400 participating postsecondary institutions. These federally funded grants help about 5.4 million full-time and part-time college and vocational school students nationally. For the 2010–2011 school year, 7 of the top 10 colleges by total Pell Grant money awarded were for-profit institutions. This may be in part due to the large enrollment numbers at many of these institutions; in Arizona for example, the University of Phoenix had an enrollment of 380,000 students.
Today, the Pell Grant program assists undergraduates of low-income families, who are actively attending universities and or other secondary institutions. However, before the Pell Grant became what it is today, it went through numerous changes.
In 1965, Congress passed the Higher Education Act of 1965 (HEA). President Lyndon B. Johnson implemented the HEA as a part of his administration's agenda to assist and improve higher education in the United States. This was the initial legislation to benefit students of lower and middle-income. The HEA program not only included grants but also low interest loans to students who did not fully qualify to receive grants. Universities and other institutions such as vocational schools benefited as well from the HEA program, receiving federal aid to improve the quality of the education process. "The student aid programs administered by the U.S. Department of Education are contained in Title IV of the HEA, which is why they are referred to as "Title IV Programs."
In 1972, Title IX Higher Education Amendments were a response to the distribution of aid in the current grant. Senator Claiborne Pell set forth the initial movements to reform the HEA. Opportunity Grant Program (Basic Grant) were intended to serve as the "floor" or "foundation" of an undergraduate student's financial aid package. Other financial aid, to the extent that it was available, would be added to the Basic Grant up to the limit of a student's financial need. Most changes to the federal student aid program result from a process called "reauthorization". Through the process of reauthorization, Congress examines the status of each program and decides whether to continue that program, and whether a continued program requires changes in structure or purpose. The campus-based programs have been reauthorized every five or six years beginning in 1972.
The Higher Education Amendments of 1972 
The Higher Education Amendments of 1972 reauthorized the three campus-based programs, leaving the Economic Opportunity Grant Program with the same name, but renaming the two others: the National Defense Student Loan Program became the National Direct Student Loan or Federal Direct Student Loan Program; and the Federal Supplemental Educational Opportunity Grant Program (SEOG). In addition, Proprietary (profit-making) schools became eligible to use Title IV Funds. Also, the Educational Opportunity Grant Program would no longer function as a stand-alone program of gift aid, but instead would be linked with the Basic Grant Program.
In 1978 the Middle Income Student Assistance Act of 1978 (MISAA) was signed into act by President Jimmy Carter. This bill provides more generous Basic Educational Opportunity Grant—Pell grants-to low-income students, and makes eligible students from families with income up to about $25,000. An additional 1.5 million students from middle-income families will be eligible for the Basic Grants program.
In 1978, the alterations to the HEA were made to honor Rhode Island Senator Claiborne Pell with his hard work and dedication to improving the higher education of the students in the United States.
Education Amendments of 1978 
Middle-income families were now able to borrow $3,000 a year for each dependent child in school regardless of parent income.
Recent legislation 
Several changes to the program occurred in 2011. The maximum award amount for the 2011–2012 award year is $5,550. Despite a shortened application process, fewer funds for the 2011–2012 program could lead to financial problems for many students. The program was funded at an amount of $17,114,000,000 from 2008–2010 as part of the American Recovery and Reinvestment Act of 2009; however, the additional funding does not fully match the needs of the increasing numbers of students enrolling in college and qualifying for aid through the recession. The Pell Grant program was subject to a $5.7 billion decrease in funding as part of a continuing resolution (H.R. 1), which cleared the House in February 2011 and cut about $60 billion from the federal budget. The changes would take effect for the 2011–12 school year, decreasing the maximum amount of aid for the most needy students from $5,550 to $4,705 a year; in addition, about 1.7 million students who receive smaller Pell Grants would become ineligible for the program. Approval for the cuts is not certain due to long-standing bipartisan support from the Senate. As of April 6, 2011 funds have not been approved, as the Senate has not voted to pass this legislation.
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The application process requires the student and the student’s family complete a Free Application for Federal Student Aid (FAFSA) form. The applicant should complete the FAFSA form for the first time prior to starting the freshman undergraduate year, and then update the form each year as he/she progresses through the college undergraduate term. Each year, the applicant is asked to include information about parent or guardian income, financial need and grades, etc. The first step in applying for the Pell Grant is to complete or update the FAFSA form on or after July 1 of each year. The FAFSA application can be completed and submitted at www.fafsa.ed.gov. There are self-explanatory instructions in the "Fill out a FAFSA" section. High school Students can get a FAFSA form from school counselors or fill out the form online. If corrections need to be made to a completed FAFSA form, changes can be made in step 3 of the application in the "Make Corrections to a Processed FAFSA" section. When the student completes or updates the FAFSA application, questions are asked to determine eligibility for the Pell Grant, among other government grants and funding. After the initial FAFSA application is submitted, the student will be notified by email or regular postal delivery if and when Pell Grant funding is awarded. Students or parents should always make copies of the confirmation sheet for personal records.
The United States Department of Education has a standard formula that they use to evaluate the information that each person supplies when applying for the Pell Grant. The formula used was created by Congress from criteria submitted through the FAFSA form. This formula produces a number that is called the Expected Family Contribution (EFC) which determines the student's eligibility.
This grant requires that each applicant be: an undergraduate student who has not yet earned a bachelor’s degree; a United States citizen or an eligible non-citizen; and has a high school diploma or a GED or can demonstrate the ability to benefit from the program. Applicants must also sign a statement certifying that they will only use the aid for education related purposes, that they are not currently in default for any federal student loans, and that they don’t owe a refund for any federal education grants.
An applicant may not receive Pell Grant funds from more than one college at a time.
Drug conviction 
Students who have received a drug conviction while receiving federal student aid may become ineligible for further aid, depending on personal circumstances. Such ineligibility may be reversed with appropriate remediation.
Award amount 
As with all grants, there is a maximum amount that the government funds for each applicant. For the 2010–2011 and 2011–2012 award years, the maximum amount was $5,550. President Obama's budget for 2014 plans to increase that amount to $5,645. The maximum amount of the grant usually depends on the EFC and several other factors, including cost of attendance, the amount of time the student plans to attend college, whether it is a full academic year, and whether one is a full-time or part-time student Once one has been considered eligible, the money can be obtained a couple of ways: the student's school can apply Pell Grant funds to school costs, pay the student directly, usually by check, or combine these methods. The school must tell the student in writing how much the award will be and how and when it will be paid, and disburse Pell Grant funds once a semester/term or twice during the academic year. Under certain circumstances, Pell funds can also be used to fund Career Pathways programs and support services.
Costs for which the grant can be used 
Typically, the college first applies the grant or loan money toward a student's tuition, fees, and (if the student lives on campus) room and board. Any money left over is paid to the student for other expenses. The student might be able to choose whether the leftover money comes in the form of a check, cash, a credit to a bank account, or another method. 
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