The "Promoting Equal Learning and Liberty Act" or "PELL Act" seeks to fundamentally alter the landscape of federal funding for higher education by eliminating programs that classify institutions based on the racial or ethnic composition of their student bodies. The bill asserts that such programs violate the Equal Protection Clause of the 14th Amendment and the Fifth Amendment, citing the Supreme Court's ruling in *Students for Fair Admissions v. Harvard College*.

The legislation argues that existing Minority-Serving Institution (MSI) programs, which allocate hundreds of millions in federal grants, create financial incentives for discrimination and exceed Congress's spending power. It specifically criticizes Hispanic-Serving Institution programs for relying on ethnic categories without regard to citizenship and for potentially inducing discrimination against U.S. citizens. The bill posits that race and ethnicity are arbitrary proxies for need and that these programs siphon resources from more constitutionally sound initiatives.

To address these concerns, the bill proposes significant amendments to the Higher Education Act of 1965 and other federal statutes. It repeals specific programs for Hispanic-Serving Institutions, Predominantly Black Institutions, Asian American and Native American Pacific Islander-serving institutions, Alaska Native-serving institutions, and Native Hawaiian-serving institutions. Many existing programs are modified to remove references to minority status and instead prioritize institutions that serve a substantial number of Federal Pell Grant recipients or low-income students.

Key changes include amending eligibility criteria for various grants, such as the Science and Engineering Improvement Program, to explicitly prohibit discrimination based on race or ethnicity in admissions or hiring. The bill also reduces the authorized funding for certain programs, like those for Historically Black Colleges and Universities and Tribal Colleges and Universities, while redirecting focus to activities that benefit all students, particularly Pell Grant recipients.

A central provision of the PELL Act is the increase in funding for the Federal Pell Grant program. The bill mandates that savings generated from the elimination of race-based funding programs be redirected to supplement Pell Grants, starting in award year 2028-2029. This aims to constitutionally increase educational opportunities for all needy individuals, regardless of race or ethnicity.

Furthermore, the bill requires federal agencies to conduct a review of all federal laws to identify provisions that include the term "minority-serving institution" or allocate funding based on racial or ethnic preferences. It also establishes a general prohibition against federal financial assistance awards considering the racial or ethnic makeup of a recipient institution or supporting institutions that discriminate based on race or ethnicity.