### §1087–52. Allocation of funds

#### (a) Allocation based on previous allocation

(1) From the amount appropriated pursuant to section 1087–51(b) of this title for each fiscal year, the Secretary shall first allocate to each eligible institution for each succeeding fiscal year, an amount equal to 100 percent of the amount such institution received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year).

(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—

(i) $5,000; or

(ii) 90 percent of the amount received and used under this part for the first year it participated in the program.

(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—

(i) $5,000;

(ii) an amount equal to (I) 90 percent of the amount received and used under this part in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or

(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.

(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—

(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and

(ii) received a larger amount under this subsection in the second year of participation,

an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.

(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.

(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—

(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and

(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.

(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).

(4)(A) Notwithstanding any other provision of this section, the Secretary may allocate an amount equal to not more than 10 percent of the amount by which the amount appropriated in any fiscal year to carry out this part exceeds $700,000,000 among eligible institutions described in subparagraph (B).

(B) In order to receive an allocation pursuant to subparagraph (A) an institution shall be an eligible institution from which 50 percent or more of the Pell Grant recipients attending such eligible institution graduate or transfer to a 4-year institution of higher education.

#### (b) Allocation of excess based on share of excess eligible amounts

(1) From the remainder of the amount appropriated pursuant to section 1087–51(b) of this title after making the allocations required by subsection (a) of this section, the Secretary shall allocate to each eligible institution which has an excess eligible amount an amount which bears the same ratio to such remainder as such excess eligible amount bears to the sum of the excess eligible amounts of all such eligible institutions (having such excess eligible amounts).

(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—

(A)(i) the amount of that institution's need (as determined under subsection (c) of this section), divided by (ii) the sum of the need of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to section 1087–51(b) of this title for the fiscal year; exceeds

(B) the amount required to be allocated to that institution under subsection (a) of this section.

#### (c) Determination of institution's need

(1) The amount of an institution's need is equal to the sum of the self-help need of the institution's eligible undergraduate students and the self-help need of the institution's eligible graduate and professional students.

(2) To determine the self-help need of an institution's eligible undergraduate students, the Secretary shall—

(A) establish various income categories for dependent and independent undergraduate students;

(B) establish an expected family contribution for each income category of dependent and independent undergraduate students, determined on the basis of the average expected family contribution (computed in accordance with part F of this subchapter of a representative sample within each income category for the second preceding fiscal year;

(C) compute 25 percent of the average cost of attendance for all undergraduate students;

(D) multiply the number of eligible dependent students in each income category by the lesser of—

(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or

(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;

(E) add the amounts determined under subparagraph (D) for each income category of dependent students; and

(F) multiply the number of eligible independent students in each income category by the lesser of—

(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or

(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;

(G) add the amounts determined under subparagraph (F) for each income category of independent students; and

(H) add the amounts determined under subparagraphs (E) and (G).

(3) To determine the self-help need of an institution's eligible graduate and professional students, the Secretary shall—

(A) establish various income categories of graduate and professional students;

(B) establish an expected family contribution for each income category of graduate and professional students, determined on the basis of the average expected family contribution (computed in accordance with part F of this subchapter of a representative sample within each income category for the second preceding fiscal year;

(C) determine the average cost of attendance for all graduate and professional students;

(D) subtract from the average cost of attendance for all graduate and professional students (determined under subparagraph (C)), the expected family contribution (determined under subparagraph (B)) for each income category, except that the amount computed by such subtraction for any income category shall not be less than zero;

(E) multiply the amounts determined under subparagraph (D) by the number of eligible students in each category; and

(F) add the amounts determined under subparagraph (E) of this paragraph for each income category.

(4)(A) For purposes of paragraphs (2) and (3), the term "average cost of attendance" means the average of the attendance costs for undergraduate students and for graduate and professional students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).

(B) The average undergraduate and graduate and professional tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate and graduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.

(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.

(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.

#### (d) Reallocation of excess allocations

(1) If institutions return to the Secretary any portion of the sums allocated to such institutions under this section for any fiscal year, the Secretary shall reallot such excess to eligible institutions which used at least 5 percent of the total amount of funds granted to such institution under this section to compensate students employed in tutoring in reading and family literacy activities in the preceding fiscal year. Such excess funds shall be reallotted to institutions which qualify under this subsection on the same basis as excess eligible amounts are allocated to institutions pursuant to subsection (b) of this section. Funds received by institutions pursuant to this subsection shall be used to compensate students employed in community service.

(2) If, under paragraph (1) of this subsection, an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing this paragraph would be contrary to the interest of the program.

#### (e) Filing deadlines

The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.

(Pub. L. 89–329, title IV, §442, as added Pub. L. 99–498, title IV, §403(a), Oct. 17, 1986, 100 Stat. 1429; amended Pub. L. 100–50, §11(a), June 3, 1987, 101 Stat. 348; Pub. L. 102–325, title IV, §442, July 23, 1992, 106 Stat. 564; Pub. L. 103–208, §2(d)(1), (2), Dec. 20, 1993, 107 Stat. 2470; Pub. L. 105–244, title IV, §442(a), (b), Oct. 7, 1998, 112 Stat. 1712; Pub. L. 110–315, title IV, §442, Aug. 14, 2008, 122 Stat. 3258; Pub. L. 116–260, div. FF, title VII, §704(1), (3), (4), Dec. 27, 2020, 134 Stat. 3199, 3200.)

#### Amendment of Section

Pub. L. 116–260, div. FF, title VII, §§701(b), 704(1), (3), (4), Dec. 27, 2020, 134 Stat. 3137, 3199, 3200; Pub. L. 117–103, div. R, §102(a), Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, this section is amended:

(1) by striking "the expected family contribution" each place the term appears and inserting "the student aid index";

(2) by striking "an expected family contribution" each place the term appears and inserting "a student aid index"; and

(3) by striking "average expected family contribution" each place the term appears and inserting "average student aid index".

See 2020 Amendment notes below.

#### **Editorial Notes**

#### Codification

Section was formerly classified to section 2752 of Title 42, The Public Health and Welfare, prior to transfer to this section. See note below.

Section was originally enacted as section 122 (and later renumbered section 142) of the Economic Opportunity Act of 1964, Pub. L. 88–452, at which time it was classified to section 2752 of Title 42, The Public Health and Welfare. It was renumbered as section 442 of title IV of the Higher Education Act of 1965, Pub. L. 89–329, by Pub. L. 90–575, §131(a), (b)(1), and later editorially transferred to this section to merge with the rest of the Act, which is classified to this chapter. For complete credit information on acts affecting this section prior to Pub. L. 99–498, see Prior Provisions note below.

#### Prior Provisions

A prior section 442 of Pub. L. 89–329, title IV, formerly Pub. L. 88–452, title I, §142, formerly §122, Aug. 20, 1964, 78 Stat. 514; Pub. L. 89–329, title IV, §441(1), Nov. 8, 1965, 79 Stat. 1249; renumbered §142, Pub. L. 90–222, title I, §111(a), Dec. 23, 1967, 81 Stat. 726; renumbered Pub. L. 89–329, title IV, §442, and amended Pub. L. 90–575, title I, §§131(a), (b)(1), (3), 133(a), 135, Oct. 16, 1968, 82 Stat. 1028, 1029; Pub. L. 92–318, title I, §135B, June 23, 1972, 86 Stat. 270; Pub. L. 96–374, title IV, §§432, 433, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1433, 1503, related to allocation of funds, prior to the general revision of this part by Pub. L. 99–498.

Another prior section 442 of Pub. L. 89–329, title IV, Nov. 8, 1965, 79 Stat. 1251, which was classified to section 2757 of Title 42, The Public Health and Welfare, authorized appropriations for the fiscal years ending June 30, 1966, 1967, and 1968, to carry out the provisions of this part, prior to repeal by Pub. L. 90–575, title I, §131(a), Oct. 16, 1968, 82 Stat. 1028.

#### Amendments

2020—Subsec. (c)(2)(B). Pub. L. 116–260, §704(4), substituted "average student aid index" for "average expected family contribution".

Pub. L. 116–260, §704(3), substituted "a student aid index" for "an expected family contribution".

Subsec. (c)(2)(D)(ii), (F)(ii). Pub. L. 116–260, §704(1), substituted "the student aid index" for "the expected family contribution".

Subsec. (c)(3)(B). Pub. L. 116–260, §704(4), substituted "average student aid index" for "average expected family contribution".

Pub. L. 116–260, §704(3), substituted "a student aid index" for "an expected family contribution".

Subsec. (c)(3)(D). Pub. L. 116–260, §704(1), substituted "the student aid index" for "the expected family contribution".

2008—Subsec. (c)(4)(D). Pub. L. 110–315 substituted "$600" for "$450".

1998—Subsec. (a)(1). Pub. L. 105–244, §442(a)(1), substituted "received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year)" for "received and used under this part for fiscal year 1985".

Subsec. (a)(2)(A), (B). Pub. L. 105–244, §442(a)(2)(A), substituted "1999" for "1985" in introductory provisions.

Subsec. (a)(2)(C)(i). Pub. L. 105–244, §442(a)(2)(B), substituted "2000" for "1986".

Subsec. (b). Pub. L. 105–244, §442(b)(1), (2), redesignated subsec. (c) as (b), and struck out heading and text of former subsec. (b). Text read as follows: "From one-quarter of the remainder of the amount appropriated pursuant to section 1087–51(b) of this title for any fiscal year (after making the allocations required by subsection (a) of this section), the Secretary shall allocate to each eligible institution an amount which bears the same ratio to such one-quarter as the amount the eligible institution receives for such fiscal year under subsection (a) of this section bears to the amount all such institutions receive under such subsection (a) of this section."

Subsec. (b)(1). Pub. L. 105–244, §442(b)(3), struck out "three-quarters of" after "From".

Subsec. (b)(2)(A)(i). Pub. L. 105–244, §442(b)(4), substituted "subsection (c)" for "subsection (d)".

Subsec. (c). Pub. L. 105–244, §442(b)(2), redesignated subsec. (d) as (c). Former subsec. (c) redesignated (b).

Subsec. (c)(3). Pub. L. 105–244, §442(b)(5), struck out "the Secretary, for academic year 1988–1989 shall use the procedures employed for academic year 1986–1987, and, for any subsequent academic years," after "professional students," in introductory provisions.

Subsec. (d). Pub. L. 105–244, §442(b)(2), redesignated subsec. (e) as (d). Former subsec. (d) redesignated (c).

Subsec. (d)(1). Pub. L. 105–244, §442(b)(6), substituted "5 percent" for "10 percent", "in tutoring in reading and family literacy activities in" for "in community service in", and "subsection (b)" for "subsection (c)".

Subsecs. (e), (f). Pub. L. 105–244, §442(b)(2), redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d).

1993—Subsec. (d)(4)(C). Pub. L. 103–208, §2(d)(1), substituted "150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college" for "three-fourths in the Pell Grant family size offset".

Subsec. (e). Pub. L. 103–208, §2(d)(2), designated existing provisions as par. (1) and added par. (2).

1992—Subsec. (a)(4). Pub. L. 102–325, §442(a), added par. (4).

Subsec. (e). Pub. L. 102–325, §442(b), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows:

"(1) If an institution returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year the Secretary shall reallocate such excess in accordance with paragraph (2). Any sums reallocated under this subsection may be used in accordance with section 1087–55(a)(2) of this title.

"(2) The Secretary shall reallot not to exceed 25 percent of the amount available pursuant to paragraph (1) to eligible institutions for use in initiating, improving, and expanding programs of community service-learning conducted in accordance with section 1087–57 of this title. The Secretary shall allocate the remainder of the amounts available pursuant to paragraph (1) to eligible institutions based upon the criteria described in section 1087–57(c) of this title."

1987—Subsec. (e)(2). Pub. L. 100–50, substituted "not to exceed 25 percent" for "25 percent" and "section 1087–57(c) of this title" for "subsection (c) of this section", and made technical amendment to reference to section 1087–57 of this title to correct numerical designation of corresponding section of original act.

#### **Statutory Notes and Related Subsidiaries**

#### Effective Date of 2020 Amendment

Amendment by Pub. L. 116–260 effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, see section 701(b) of Pub. L. 116–260, set out as a note under section 1001 of this title.

#### Effective Date of 1998 Amendment

Pub. L. 105–244, title IV, §442(c), Oct. 7, 1998, 112 Stat. 1712, provided that: "The amendments made by this section [amending this section] shall apply with respect to allocations of amounts appropriated pursuant to section 441(b) for fiscal year 2000 or any succeeding fiscal year."

#### Effective Date of 1993 Amendment

Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title.

#### Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as a note under section 1001 of this title.

#### Effective Date of 1987 Amendment

Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title.

#### Effective Date

Pub. L. 99–498, title IV, §403(b)(1), as added by Pub. L. 100–50, §22(c), June 3, 1987, 101 Stat. 361, provided that: "Section 442 of the Act [this section] shall apply with respect to the allocation of funds for academic year 1988–1989 and succeeding academic years."