Revises program requirements for adjustments for insufficient appropriations.
Requires, for FY 2002 and 2003, if appropriations are insufficient to satisfy fully all Pell Grant entitlements, the amount paid with respect to each entitlement to be: (1) the full amount for any student whose expected family contribution is $400 or less; or (2) a percentage of that entitlement, as determined in accordance with a schedule of reductions established by the Secretary of Education, for any student whose expected family contribution is more than $400. Requires any such schedule to: (1) contain a single linear reduction formula in which the percentage reduction increases uniformly as the entitlement decreases; and (2) provide no payment if an entitlement is reduced to less than $200.
Requires each institution of higher education which has a specified type of agreement with the Secretary, for FY 2004 or any succeeding fiscal year, to: (1) make Pell Grant awards to its eligible students in the full amount to which such student is entitled; (2) credit the amounts of such awards toward the tuition, fees, room and board, and other expenses incurred by the eligible student, with specified exceptions for students who do not reside in institutionally owned or operated housing; and (3) submit vouchers to the Secretary for reimbursement of such awards.