Maximum awards to undergraduates through the federal government’s Pell grants program would increase by $250 to $4,000 per year under a provision passed last week by the U.S. House of Representatives.

The $250 boost in the cap on Pell grants is significantly larger than the $100 increase President Bush had proposed earlier this year in his education budget.

The Department of Education (DOE) awards Pell grants to about 4 million undergraduates each year, based on their families’ financial need and the cost of the colleges they attend.

The grants are capped for each student, a ceiling that has risen in recent years. In the 1997-98 school year, the maximum award was $2,700. By last year it had increased to $3,750.

The Bush administration had argued for a smaller increase because, as the economy slows, the DOE predicts more people will enroll in school—and put pressure on the program’s budget. The larger $250 increase in maximum Pell awards will cost an estimated extra $700 million, about a 10 percent increase over the program’s current cost.

Harvard financial aid officers welcomed the Congressional action.

“The increase in the Pell grant is actually a wonderful bit of news for students nationwide, particularly for students who are attending institutions that don’t have a lot of institutional financial aid,” said Harvard’s Director of Financial Aid Sally C. Donahue. “For students who are at less well-endowed institutions, the Pell grant might be their only form of grant money.”

Pell grants make up only a small part of the College’s student aid packages. Of about 3,000 undergraduates on financial aid, only 20 percent receive Pell grants. The total Pell money from the DOE to Harvard students totaled $1.2 million last year, out of a total of $54 million in grant funds given out to undergraduates, Donahue said.

The measure was sponsored in the House by Rep. Ralph Ragula (R-Ohio), who chairs the subcommittee that funds the DOE, and Rep. David Obey (D-Wis.), the ranking Democrat on that subcommittee.

In the past two weeks, Ragula and Obey met with White House and Senate education leaders to negotiate a larger Pell allotment, said David P. Sirota, Obey’s press secretary. He said Obey threatened a “serious stalemate” over the appropriation measure if a larger increase was not granted.

Even after those talks, the education funding bill that includes the Pell increase remains far from the President’s desk. It must still pass the Senate, and discrepancies between the House and Senate versions will have to be hammered out in a conference committee.

—Staff Writer Andrew S. Holbrook can be reached at holbr@fas.harvard.edu.