If federal increases in Pell grant funding are to increase educational opportunities and attainment, states must ensure these increases supplement, rather than replace, state grant aid.

Changes to the Pell grant program will not affect all state programs the same way. In some states, the impact will be immediate and direct. For example, some programs promise eligible students a certain amount of total grant aid—either state and federal aid combined or state, federal, and institutional aid combined. In states that make their awards without reference to Pell, students are more likely to see their total grant aid increase along with their Pell grants.

This brief considers different basic grant structures, providing examples of actual state grant programs and how increases in Pell are likely to affect them. We also address impending modifications to the Pell program and their potential implications for state grant aid.

In setting award levels, states can use one of three basic approaches: a progressive grant structure under which award size declines as income or expected family contribution (EFC) increases, a flat grant that adds the same number of dollars to each student’s Pell award, or a system that awards larger state grants to students with higher EFCs who receive smaller Pell grants, so all aided students have similar total grant amounts.

Each state can examine the relationship between its aid and the federal grant program. Some states will find that no modification is necessary. Others will find that either tweaking the parameters of their programs or restructuring them will be the best strategy for increasing educational opportunities for students with the most limited resources.