PELL Act Eliminates Race-Based College Grants, Funnels $350M+ in Savings to Boost Pell Grant Awards by 2028

The “Promoting Equal Learning and Liberty Act,” or PELL Act, is a massive overhaul of how the federal government funds higher education institutions. The core action is a trade-off: it eliminates nearly all federal grant programs designated for Minority-Serving Institutions (MSIs) and replaces that funding with a permanent, inflation-adjusted increase to the maximum Federal Pell Grant award for low-income students, starting in 2028.

The Great Funding Swap: From Institutions to Students

This bill explicitly targets grant programs that award money based on the racial or ethnic demographics of a college's student body. The reasoning laid out in the findings section is that these programs—such as those for Hispanic-Serving Institutions (HSIs), Predominantly Black Institutions (PBIs), and Asian American and Native American Pacific Islander-serving institutions (AANAPISIs)—are unconstitutional and create incentives for colleges to discriminate based on race. The bill repeals Title V entirely, which authorized the HSI program, and eliminates specific grant eligibility for PBI, AANAPISI, Alaska Native, and Native Hawaiian-serving institutions (Sec. 3).

If you’re a student who relies on the Pell Grant, this is where the benefit comes in. The bill mandates that the savings generated from eliminating these targeted programs (estimated by the Office of Management and Budget) will be permanently appropriated and used to increase the maximum Pell Grant award starting in fiscal year 2028 (Sec. 5). For a student juggling work and classes, a bigger Pell check could be the difference between taking out a loan and staying debt-free.

The Cost for Targeted Institutions

While the Pell Grant increase helps students directly, the elimination of institutional grants hits colleges that serve specific demographics hard. These MSI grants often fund critical infrastructure, student support services, and specific programs that keep these institutions running. For example, the bill repeals the $350 million HSI program entirely and drastically cuts the authorized funding for the specific grants supporting Historically Black Colleges and Universities (HBCUs) and Tribal Colleges and Universities (TCUs), dropping the authorized level from $255 million to $115 million annually (Sec. 3).

This means that HBCUs and TCUs, while retaining some dedicated funding, will see a significant reduction in their authorized federal support. Other MSIs, such as those serving large Hispanic or Asian American populations, lose their dedicated federal funding streams completely. The bill attempts to replace this by shifting eligibility criteria in other grant programs (like those for science improvement) to focus on institutions that serve a substantial number of Pell Grant recipients, effectively focusing on economic need rather than race (Sec. 3).

The New Race-Neutral Rulebook

Beyond just the funding swap, the PELL Act imposes strict new requirements across the entire federal government and higher education landscape. Throughout the bill, new language is added to nearly every science, research, and education grant program—from the National Science Foundation (NSF) to the Department of Energy—prohibiting federal agencies from considering the racial or ethnic composition of an institution when awarding grants (Sec. 4). This means the focus must be purely on merit or economic need.

Crucially, the bill requires colleges to certify that they do not discriminate based on race in admissions or hiring, including through the use of "racial quotas or preferences," to remain eligible for nearly all federal funding (Sec. 3, Sec. 4). This is a direct response to the Supreme Court’s ruling on affirmative action and aims to enforce race-neutral policies across the board. If a college uses any policy that could be construed as a racial preference, they risk losing access to major federal grant money, fundamentally changing how many institutions operate and recruit talent.