Federal Pell Grant Program U.S. Department of Education

The Federal Pell Grant (Pell) 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 5,300 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 FY 2017, the Department disbursed $26.9 billion in Pell Grants averaging approximately $3,724 to almost 8.3 million students. The maximum Pell Grant award was $5,815 for the 2016–17 award year and increased to $5,920 for the 2017–18 award year.

Agency Accountable Official: Tim Soltis, Delegated to Perform the Duties of the Chief Financial Officer

Program Accountable Official(s): Jay Hurt, Chief Financial Officer, Federal Student Aid

Total Payments
Improper Payments
Improper Payment Rate

Supplemental Measures

Current Measure: 62.70%

Target: 62.70%

Description: The total number of Pell-eligible applicants who transferred tax data from the IRS to their Free Application for Federal Student Aid (FAFSA) as a percent of the total number of Pell-eligible applicants who were determined to be eligible to use the IRS Data Retrieval Tool (IRS DRT) to transfer tax data. Use of the IRS DRT to directly transfer tax information from the IRS to the online FAFSA verifies applicants’ income and as applicable their parents’ income to determine how much aid they are eligible to receive. Errors in income reported on the FAFSA application is one of the root causes of improper payments in the Pell Program. Transferring tax data to the FAFSA with the IRS DRT helps ensure that the income reported is accurate, reducing the likelihood of an improper payment being made.

Update Frequency: Annually

Data Current as of: August 2017

Program Comments

To calculate an annual improper payment estimate for the Pell Program, the Department of Education obtained approval from OMB in FY 2017 to use an alternative methodology which replaces the previous methodology. This alternative methodology leverages data collected through Federal Student Aid Program Reviews, which include procedures such as verifying student-reported income levels, student academic performance, and eligibility on the disbursed funds for a sample of students in each review. In FY 2017, gross improper payments in the Pell Program were estimated to be $2.2 billion, or 8.21% of total program outlays of $26.9 billion.  

Root causes of improper payments in the Pell Program include incorrect self-reporting of an applicant’s income which leads to incorrect awards based on Expected Family Contribution (EFC); incorrect processing of student data by institutions during normal operations; student account data changes not applied or processed correctly; ineligibility for a Pell Grant (e.g., validity of high school attended, history of degrees obtained); satisfactory academic progress not achieved; and incorrectly calculated return records by institutions returning Title IV student aid funds. To prevent and reduce improper payments in the Pell 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 DRT. With just a few simple steps, applicants can view information from their IRS tax return and transfer that information directly into the FAFSA. The IRS disabled the IRS DRT in March 2017 following concerns that data from the tool could be used by identify thieves to file fraudulent tax returns. Additional security and privacy protections have been added to address concerns that data from the tool could be used by identify thieves to file fraudulent tax returns. The IRS DRT is available to use with the 2018-19 FAFSA form. The IRS DRT remains the fastest, most accurate way to input tax return information into the FAFSA form.  For the latest information about the status of the IRS DRT please visit: https://studentaid.ed.gov/sa/about/announcements/irs-drt-unavailable

Applicants who are eligible to use the IRS DRT are encouraged through various messaging to use the tool. Of those who fill out the FAFSA each year, some applicants indicate that they intend to file a tax return, but have not done so yet. These applicants must later retrieve their IRS data once they file or face verification by the school. For the 2017-18 award year, applicants were able to complete their FAFSA using “prior-prior year” tax data. This is in contrast with the current “prior year” process where many applicants submit their FAFSAs before tax returns have been completed resulting in the need to estimate income and tax information that subsequently needs to be corrected once the tax return is filed; or worse, waiting to complete their FAFSA until after the tax return has been filed. Also, applicants are now able to initiate their application earlier. Beginning with the 2017-18 award year, the start of the FAFSA cycle has been moved up from Jan 1 to Oct 1.

Another key action in addressing the inaccuracies on the FAFSA, are the changes in verification regulations. Verification is the process required by the Department that schools conduct to confirm specific information reported on the FAFSA by the applicant. Annually, the Department analyzes grant recipients and the verification selection system, and informs the financial aid community of what FAFSA items are subject to verification for the upcoming award year. This annual analysis is performed to enhance verification methodology and to meet the goal of selecting the applicants who are most likely to have incorrect information on their FAFSA.  

In addition, Federal Student Aid’s Program Compliance office works to promote accountability in the administration of Title IV student financial aid through institutional oversight and enforcement. As part of its ongoing oversight and enforcement activities, Program Compliance conducts periodic recertification of all schools’ eligibility and issues loss of eligibility determinations to schools; assesses millions of dollars in final program review determinations and final audit determinations; and debars individuals from receiving assistance or benefits from any federal agency as a result of financial aid fraud or other criminal convictions. Additional information on the Department’s efforts to reduce and prevent improper payments in the Pell Program can be found in its annual AFR (http://www2.ed.gov/about/reports/annual/index.html).