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Pell Grants

Department of Education

The Federal Pell Grant Program provides need-based grants to low-income undergraduate and certain post-baccalaureate students to promote access to postsecondary education.  Students may use their grants at any one of approximately 5,400 participating postsecondary institutions.  Grant amounts are dependent on: the student's expected family contribution (EFC); the cost of attendance (as determined by the institution); the student's enrollment status (full-time or part-time); and whether the student attends for a full academic year or less.  In 2011, an estimated 9 million students will receive Pell Grants worth up to $5,550 per student. 

Agency Accountable Official: Thomas P. Skelly, Director, Budget Service and Acting Chief Financial Officer

Program Accountable Official: Jay Hurt, Chief Financial Officer, Office of Federal Student Aid

Current

$36.5B

Total Payments (Outlays)more info

$1.0B

Improper Paymentsmore info

2.7%

Improper Payment Ratemore info

2012

2.7% Improper Payment Rate Target more info

All amounts are in billions of dollars

Tabular view for Projected improper payments Tabular View   

 

Note: The final Pell Grant error rate for FY 2009 was 3.5%, and at the time of reporting for FY 2010 the preliminary error rate was 3.1%.  When establishing reduction targets for FY 2011 – 2013, the Department used the final error rate from FY 2009 instead of the FY 2010 preliminary rate.  As such, the targets will be revisited during FY 2011 and may be modified in the future.

Program Comments

To calculate an annual improper payment estimate for the Pell Grant Program, the Department of Education conducts studies with the Internal Revenue Service (IRS) using data submitted by applicants in the Free Application for Federal Student Aid (FAFSA).  The Department provides information from the FAFSA to the IRS for a sample of Pell aid recipients.  The IRS compares this FAFSA data to its own tax data for these recipients to identify variances in the aid recipient’s self-reported income data used to determine aid eligibility that may result in improper payments.  In FY 2010, gross improper payments in the Pell Grant Program were estimated to be $1.005 billion, or 3.12% of total program outlays.  For the statistical study of 2009-2010 award year data that was the basis of the FY 2010 improper payment estimate reported in the Agency Financial Report (AFR), the estimated Pell Grant over-award improper payment rate was 2.01% and the under-award rate was 1.12%, with a total (absolute) estimated improper payment rate of 3.12%.

The major root cause of improper payments in the Pell Grant Program is incorrect self-reporting of an applicant’s income.  To prevent and reduce improper payments in the Pell Grant Program, the Department is pursuing several corrective actions.  One of the most recent significant actions that the Department is pursuing is to encourage applicants to retrieve certain income information directly from the IRS with the use of the IRS Data Retrieval Tool.  With just a few simple steps, applicants can view information from their IRS tax return and transfer that information directly into the FAFSA.

The tool was made available to applicants in January of 2010 for the 2009-2010 application cycle.

To date, approximately 3.7 million applicants and their parents have opted to use this tool for providing the appropriate tax-related information.  Additional improvements are being made to the 2012-2013 application cycle to determine eligibility for the IRS Data Retrieval Tool and identify additional ways to encourage those applicants to utilize the tool.

Additional information on the Department’s efforts to reduce and prevent improper payments in the Pell Grant Program can be found in its annual AFR (http://www2.ed.gov/about/reports/annual/2010report/5a-improper-payments.pdf).