Discretionary Spending

Function 500 - Education, Training, Employment, and Social Services

Restrict Pell Grants to the Neediest Students

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of dollars 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2019 2015-2024
    Restrict Pell Grants to Students With an EFC of $3,850 or Less
Change in Discretionary Spending                        
  Budget authority -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.6 -1.3
  Outlays * -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.5 -1.2
Change in Mandatory Outlays -0.1 -0.3 -0.4 -0.5 -0.5 -0.5 -0.5 -0.6 -0.6 -0.6 -1.7 -4.6
                           
    Restrict Pell Grants to Students With an EFC of Zero
Change in Discretionary Spending                        
  Budget authority -6.9 -6.9 -6.9 -6.9 -6.9 -7.0 -7.0 -7.1 -7.2 -7.2 -34.5 -70.0
  Outlays -1.9 -6.9 -6.9 -6.9 -6.9 -6.9 -7.0 -7.0 -7.2 -7.2 -29.4 -64.7
Change in Mandatory Outlays -0.6 -2.4 -2.8 -3.0 -3.1 -3.1 -3.2 -3.2 -3.3 -3.3 -12.0 -28.0

Notes: This option would take effect in July 2015. Estimates are relative to CBO’s August 2014 baseline projections.

EFC = expected family contribution; * = between -$50 million and zero.

Under current law, Pell grant recipients with an expected family contribution (EFC) exceeding 90 percent of the total maximum Pell grant award (that is, an EFC greater than $5,157 for academic year 2014–2015) are ineligible for a grant. One version of this option would make students with an EFC exceeding $3,850—the eligibility ceiling in the academic year 2006–2007—ineligible for a Pell grant; that ceiling would be adjusted for inflation in subsequent years. A stricter version of this option would reduce the eligibility ceiling to an EFC of zero.