Authorized by Lyndon Johnson in 1965 as the Higher Education Act to guarantee low-income minorities have the same opportunity for a college education as children in middle-class families, the program was renamed for Senator Claiborne Pell in 1980. Like most well-intentioned government programs, the projected costs for the new entitlement exploded and exceeded the funds appropriated by Congress within several years.
Officially begun in 1976, 1.9 million students received an average award of $759 at a total cost to the taxpayers of $1.45 billion. The totals were $8 billion in 1990, $16 billion in 2008 and $38 billion in 2012. The average award increased 13% in 2008 and 27% in 2009. In 2013, 9.7 million students received between $3,800 and $5,575 in grants. President Obama plans to increase those numbers to 14 million by 2020. 
Pell grants are not awarded by merit. The sole criterion is total family income for dependent students or individual income for independent students, a group that represents a sizable percentage of recipients and greatly increases the risks for prolonged attendance and dropping out after the first year.
Within six years, 30% of students enrolled in public 2-year institutions receive an associate’s degree. Within six years, 57% of students enrolled in public 4-year institutions graduate. Younger students do better; 45% of older students successfully complete the requirements for a bachelor’s degree, but only 9% who delay enrollment do in six years.  A Gates-Lumina study revealed that only 3% of Pell recipients had completed the 4-year credential after 6 years. 
The completion rates for Pell recipients are lower. Factors like independent status, single parenthood and dependents are risks that adversely influence success. In a recent AIR study of 1.1 million 1st year students, 500,000 failed to graduate. The cost for the students who dropped out after the first year was $4 billion. The cost in lost income and tax revenue was considerably higher.
California has 2.3 million college students enrolled on 122 campuses, including the largest community college system in the world. 250,000 students receive $1 billion in Pell Grant funds that are turned over to the schools. California’s community colleges receive over $100 million in federal, state and local tax revenue in 2008 alone for students who dropped out after the 1st year.
54% of low-income students now attend college, a remarkable increase from 31% at the start of the Pell program 1975. The majority attend community colleges. A significant percentage are enrolled in specific training programs for an occupational credential, not an academic degree. These students are often in their thirties and lack job skills. Job corps or vocational schools make more sense and cost far less.
The Pell Grant program is one of the rare federal programs that have avoided congressional oversight or public scrutiny regarding its effectiveness or bias. This may have resulted in the runaway costs and possible instances of abuse and fraud by recipients and institutions alike. U.S. Congressman Denny Rehberg called the Pell program “welfare of the 21st century” which may contain a good bit of truth.  He has a point. The 9-year entitlement until graduation is almost double the federal mandate for length of welfare.
Most colleges and universities are required to fulfill federal diversity requirements qualify for Pell money. Those that fail to do so do not receive the funds. Catholic institutions of higher education do not receive any Pell funds. All of the Black colleges do receive funds. At Tuskegee, Howard, Fisk, Spelman and Morehouse, 40-50% of their students have been receiving Pell grants for years. About 43% of Pell recipients are White. The rate of poverty among Blacks and Hispanics is considerably higher than among Whites. Even if income, not merit is the sole eligibility requirement to qualify for the program, some have said it discriminates against Whites. These are legitimate concerns that merit objective, careful scrutiny.
Federal aid to 15 million students in 2012 totaled $142 billion. $33 billion went to the Pell program. In light of the significant numbers of students who drop out after the first year or fail to graduate after six years, its limited success suggests considerable room for improvement. Among the most obvious is awarding the grants for academic merit as well as low income.
Restricting the number of years to completion of the credential would seem to be a good way to obtain a better return on a huge investment of national capital.
Pell grants are free money that does not have to be repaid by the recipients. There is no statutory limit to the program although the current maximum is 9 years to complete a 2-year program. Students who were 18 years old or younger when they started college had a ten-fold greater likelihood of graduating from college. Perhaps older students seeking job training might get better results by attending vocational schools, not college.
It is often said that no good deed goes unpunished. The maxim is especially true in the case of government programs. It is time to sound the death knell for Pell and re-examine the criteria for admission to college. Literacy and GPA might be a good place to start.
R. Claire Friend, MD, is the Assistant Professor, Department of Psychiatry and Human Behavior, UC Irvine Medical Center, and the editor of the UC Irvine Quarterly Journal of Psychiatry. She is a retired psychiatrist and frequent commentator on the psychological dimensions of education and social welfare policies.