In the Changing Financial Aid Landscape, Pell Grants Hold Steady

How do Pell Grants appear on UChicago's campus? How do they interact with institutional aid? What do they tell us about a student body's financial makeup? Mallory Moore reports for Grey City.

By Mallory Moore

Alvin Shi / The Chicago Maroon





February 27, 2019

“Think of the student budget like a bucket,” Jennifer Delaney said before pausing. A visiting associate professor at the Harris School of Public Policy and an expert in higher education policy and student financial aid, Delaney backtracked frequently to condense and prioritize information, doing her best to explain Pell Grants in 2019. In her light-filled, clean-lined office, Delaney weighed her words carefully, as if trying to figure out how to convey the intricacies of her field of study within such limited time. 

“Think of the student budget like a bucket. You put the federal money in first and then state money. You always do grants, and then loans, and then if there are local things or scholarships…then the institutional aid.” As she spoke, her words poured out faster, the bucket quickly filling. 

Though money from many sources comprises a student’s final financial aid package, federal aid and, more specifically, Pell Grants, represent the foundation of the package. Unlike federal loans, grants are a form of aid in which one is awarded a sum of money and not expected to pay it back. The Pell Grant program, funded by the federal government, is the “largest source of grants for postsecondary education,” supporting more than 7 million students nationwide in 2017–2018, according to a report by the Center on Budget and Policy Priorities (CBPP). 647 of those students attend the University of Chicago, based on data available on College Navigator, a website maintained by the Department of Education’s National Center of Education Statistics.

In 2017–2018, 32 percent of all undergraduate students received Pell funding nationwide as reported by the College Board. The majority of Pell recipients attend public institutions, accounting for more than 75 percent of Pell spending. Comparatively, 11 percent of the University of Chicago’s undergraduate population receives Pell grants, according to data available on College Navigator.

This percentage is also lower in comparison to other highly selective institutions. When comparing shares of Pell-eligible freshmen at highly ranked schools, The Washington Postfound in 2015 that all of the Ivy League institutions, with the exception of Brown University, had higher shares of Pell-eligible first-year students than the University of Chicago.

The CBPP reported that the Pell Grant program is “very well targeted to the neediest students, providing the largest awards to the lowest-income students.” 

As a result of the need-based nature of the Pell Grant program, it is frequently used as a measure of a college’s socioeconomic diversity. In the past five years, both The Washington Postand The New York Timeshave published charts and indexes to measure higher education institutions’ economic diversity, based, in part, on the number of students receiving Pell Grants.

In order to qualify for a Pell Grant, an individual must be pursuing their first undergraduate degree and have “exceptional financial need” as determined by the Free Application for Federal Student Aid (FAFSA) form. Financial need refers to the difference between the cost in attendance and the expected family contribution, calculated by congressionally mandated formulas in the Higher Education Act. According to the Department of Education, these formulas “take into account such indicators of financial strength as income, assets, and family size.”

Delaney confirmed that “the biggest drivers [of eligibility] are income and family size” but also cautioned, “it’s crazy complicated how needs analysis works.” These types of “yes but” statements became a staple of our conversation as we delved into the intricacies of the Pell funding and awarding system. For example, she explained later, “Pell expenditures have been increasing over time, but the purchasing power hasn’t been keeping pace with tuition increases,” demonstrating the complexity of allocating funding in this kind of system.  

Notably, not everyone who qualifies for a Pell Grant receives the maximum amount, which in 2017–2018, was $6,095. Eligibility for Pell works like a graduated system; depending on income, students can be awarded anywhere from around $600 to the maximum. Delaney explained this system, saying, “Pell is a highly targeted means-tested program. So basically low-income folks are qualifying for Pell. It changes a little bit each year with where exactly those thresholds are, and within Pell there are steps.” 

While the only eligibility criteria for Pell relate to economic factors, a report by the CBPP shows that Pell often supports other groups underrepresented in higher education. The report noted that “Comparing the 41 percent of students who receive Pell to non-recipient students in the 2011­–12 academic year (the most recent year for which data are available) shows that Pell students are more likely to be older, a member of a racial or ethnic minority group, financially independent, and a first-generation college student, and more likely to attend school full time and throughout the academic year.”

In recent years, students typically qualify for Pell if they have a family income of below $50,000, according to U.S. News.Most Pell recipients, however, have a family income of less than $20,000.While acknowledging some exceptions, Delaney further explained that, if a student’s family income is low enough to not pay taxes, that student will typically qualify for the maximum award. According to the Department of Education’s end of year report, in 2016–2017, 27 percent of recipients received the maximum grant.

At the University of Chicago, the average Pell award amount for students enrolled in the college during the 2016–2017 year was $4,367, about $300 higher than the national average Pell Grant during this period. This statistic reflects a national trend. Though nonprofit private institutions have the smallest percentage of Pell recipients, the average Pell award at these institutions tends to be larger than the overall national average, which takes into account both public and private institutions. 

However, even the maximum Pell amount covers only a small portion of the cost of attendance. The total cost of attending the College in 2018–2019 is estimated at $77,331 by the Office of Financial Aid and includes tuition, room and board, and other personal expenses. The maximum Pell amount of $6,095 covers less than 8 percent of that cost. 

Nationwide, the maximum Pell Grant amount has also not kept up with the rising cost of tuition at higher education institutions, both public and private. Once adjusted for inflation, the maximum as of 2017–2018 was only 5 percent higher than it was in the 1970s.This fact means that, today, “Pell covers just 29 percent of the average costs of tuition, fees, room, and board at public four-year colleges, its lowest level in more than 40 years and far below the 79 percent it covered in 1975,” according to the CBPP.The average cost of college in the United States as of 2015–2016 was $22,432, ranging from an average cost of $16,757 at public institutions to an average of $39,011 at private nonprofit institutions.In response, many private institutions, including UChicago, have developed and expanded institutional aid programs to close this gap.

The maximum Pell Grant amount changes over time, often in response to economic conditions, because it is legislated by Congress. Delaney shared that the Pell Grant program operates as “quasi-entitlement program…. It’s allowed to run deficits. Very little of the federal budget is allowed to do that. It just means that everyone who applies and is eligible for Pell will get an award each year.” 

All the students who meet Pell’s financial need criteria in a given year are guaranteed aid from the program, meaning that Pell costs to the government are mandatory spending, unlike the FBI or other government bureaus, which operate on a discretionary budget. Spending on Pell is more similar to entitlement programs such as Medicare or Social Security than federal departments such as the Department of Education, which has a limited budget set each year. At the same time, the program also requires annual appropriations from Congress, meaning that the government funding allocated to the program must be designated and passed each year. This hybrid nature of mandatory and discretionary funding makes the Pell Grant program unique, and it means that Congress can underfund or overfund the program if they estimate costs incorrectly. If Congress underfunds the program in a given year, the Department of Education typically borrows funds from the next year’s appropriations or runs a deficit. On the flipside, if there is a surplus in funds, these funds carry-over to fund the program in the next year, helping safeguard against deficits. (

Delaney pointed to a spike in the number of recipients in the years following 2008 to illustrate this. “During the recession, more people were qualifying for Pell, and more of whose who qualified were more low-income, so they were qualifying for larger award amounts,” she said. 

This trend resulted in government expenditure on Pell exceeding the congressionally allocated funding. In a 2017 report by CBPP, the authors noted that when “large Pell funding shortfalls emerged, President Obama and Congress increased funding and also restricted eligibility to lower costs.”A student’s eligibility can change even if their financial situation does not.

This limitation is echoed in the Department of Education’s End of Year Report from 2017. 

It states that “The Federal Pell Grant is distinguished from other financial assistance in that all students meeting certain criteria are guaranteed aid, with the amount of aid determined by financial need, enrollment level, and educational cost. However, because of limited funding, the program is not a true entitlement, as benefits may be reduced from those anticipated under a fully-funded system.”

Nevertheless, at the University of Chicago, federal assistance represents only a small portion of financial aid. The majority of a student’s financial aid package is composed of institutional grants and scholarships. For example, in 2016, the most recent data available on College Navigator, 58 percent of the incoming first-year class received institutional grant or scholarship aid of some form, with the average award being approximately $36,000.With the combination of federal, state, and institutional aid, the University claims to meet full demonstrated need. 

After a student receives both federal and institutional aid, however, Delaney noted that there can still be a gap. In the data available on College Navigator, this phenomenon was reflected by the number that full-time incoming students in 2016 in the income bracket of $0–$30,000 paid a net price of $3,620 after receiving their aid. 

The University’s Financial Aid Office responded to a request for comment with a statement discussing ways to close the gap between aid packages and the cost of tuition: “The expected payment to the University by College students from low-income families is close to zero. The expenses listed on sites like College Navigator include books, travel, and incidental costs—which are not charged directly by the University. Such costs typically are covered by part-time work during the school year or summer jobs. These opportunities allow students to earn money to cover school expenses or use as they see fit, often while gaining valuable professional experience.”

In recent years, the University has also undertaken a variety of initiatives to increase the socioeconomic diversity of the student body. In 2014, an article in The New York Timesstated that UChicago “has not made as big of a commitment to economic diversity as most top colleges.”In the intervening years, the University has finished phasing in a no-loan policy, meaning that no student entering the college is expected to take out a loan as part of their financial aid package. This fact is particularly pertinent for Pell Grant recipients, who are more than twice as likely to have student loans on a national level, according to The Institute for College Access and Success.

At UChicago, any student recipient of Pell also qualifies for the Odyssey Scholarship program, which provides support for low-income students and first-generation students and has steadily expanded since its inception in 2007. As most Pell recipients have a family income of under $50,000, they qualify for the program. Students selected for the program typically have a family income of below $90,000. 

The UChicago Empower Initiative, which launched this past fall, aims at providing support and removing obstacles in the admissions process. 

On its website, the Office of Admissions stated that the initiative’s goal is “to increase access to UChicago by expanding access for first-generation and rural students, enhancing financial support for those who serve our communities, and enabling student agency and ownership in the college admissions process.”

In part, it includes a commitment that students with a family income of less than $60,000, thus encompassing Pell eligible students, will have tuition, fees, as well as room and board covered by financial aid. 

Both James Nondorf, dean of admissions, and John Boyer, dean of the College, were quoted on the website and emphasized the importance of the UChicago Empower Initiative in increasing access for low-income students and expanding socioeconomic diversity at the University. 

As quoted on the website for the Office of Admissions, Boyer said, “Throughout the past century, UChicago has considered a broad diversity of cultural perspectives and academic merit without regard to socioeconomic class to be fundamental—as exemplified by our Odyssey Scholarship Program, Jeff Metcalf Internship Program, and No Barriers offerings that enable outstanding students of all backgrounds to enjoy a UChicago education.”

Pell plays just one part in this goal.