Grants

• The percentages of students receiving grants and the average amounts received by students with grant aid have increased.

In 2000, 57 percent of all full-time dependent students received grants to help them pay their educational expenses, up from 45 percent in 1990 (table 4). The percentage receiving grants increased at all income levels. At least three-quarters of students in the lowest income quarter received grants in both years (77 percent in 1990 and 84 percent in 2000) (figure 7). At the highest income level, the percentage with grants roughly doubled (from 20 to 39 percent) between 1990 and 2000. The percentage receiving grants increased at all types of institutions except private for-profit less-than-4-year institutions, where the apparent increase is not statistically significant. The average grant increased from $4,200 to $5,400 overall; it also increased for each income group and at most types of institutions. The exception was private for-profit less-than-4-year institutions, where the average grant was $2,900 in both years (table 4).

Although no statistically significant difference was measured in the average grant amounts received in 2000 by low- and high-income students ($5,500 and $5,300, respectively), low-income students would typically receive more grant aid than high-income students at a given institution. The average amount of grant aid received by an income group reflects the prices of attending the institutions they select and merit as well as need. In 2000, high-income students were more likely than low-income ones to attend higher priced institutions (Berkner et al. 2002) and to receive merit aid at private not-for-profit 4-year institutions (Horn and Peter 2003). Both of these patterns tend to bring the averages for the income groups closer together.

The federal Pell grant program, state grant programs, and institutional grant aid are the major sources of grant aid for undergraduates. In the 1990s, Pell grant awards were stable, and state and institutional grant aid increased.

• Pell grants were generally at about the same level in 1990 and 2000.

The Pell grant program is the federal government’s primary need-based grant program. The amount awarded to a Pell recipient is equal to the maximum Pell grant minus the expected family contribution.¹² The maximum award is established annually by congressional appropriation (up to the limit specified in the Higher Education Act). In 2002–03 constant dollars, it was $3,354 in 1989–90, declined to $2,765 by 1995–96, then began to increase, reaching $3,383 in 1999–2000 and $4,000 in 2002–03 (The College Board 2003b). Thus, the maximum amounts in 1990 and 2000 after adjusting for inflation were about the same.

At public 2-year institutions, the apparent change in the percentage of full-time dependent students receiving Pell grants (from 20 to 24 percent) is not statistically significant, but the average amount received rose from $1,700 to $2,200 (figure 8). At other types of institutions, no statistically significant increases were measured in the percentages of full-time dependent students receiving Pell grants in 1990 and 2000: about 21 percent at public 4-year institutions, 24 percent at private not-for-profit 4-year institutions, and 50 percent at private for-profit institutions. The average amounts received (adjusted for inflation) were in the $2,100 to $2,200 range both years.

The increase in the average amount at public 2-year institutions was partly a consequence of a change to the eligibility formula for Pell grants during the 1992 Reauthorization of the Higher Education Act that removed the cap limiting awards to 60 percent of the student budget. This change benefited students at public 2-year institutions, but had little effect on students at other types of institutions where higher budgets meant that student awards had not been limited by the cap.

• State grants have increased.

Between 1990 and 2000, the percentage of full-time dependent students receiving state grants increased from 11 to 18 percent at public 2-year institutions, 14 to 21 percent at public 4-year institutions, and 9 to 18 percent at private for-profit less-than-4-year institutions (figure 8). Students at private not-for-profit 4-year institutions were the most likely group to receive state aid in both 1990 and 2000, but no statistically significant increase over time was measured. The average amount received (adjusted for inflation) increased for students at public 4-year institutions (from $1,400 to $2,000) and decreased for students at private for-profit less-than-4-year institutions (from $2,800 to $1,900).

• Institutional aid has increased.

Full-time dependent students at all types of institutions except private for-profit less-than-4-year ones were more likely to receive institutional grant aid in 2000 than in 1990 (figure 8). In addition, the average amount received (adjusted for inflation) increased for students at both types of 4-year institutions, from $2,400 to $2,900 in the public sector, and from $4,900 to $7,600 in the private not-for-profit sector. At private for-profit less-than-4-year institutions, the average amount declined, and at public 2-year institutions, it was $900 in both years.

¹²The 1992 Reauthorization of the Higher Education Act changed how the Pell grant is awarded in several ways, but these changes affected mainly independent students (National Association of Student Financial Aid Administrators 2002). (back to text)