PowderBurns, I agree with you to the extent that college graduates normally earn higher wages and as a result, the money spent on Pell Grants is returned to the system for the next guy who needs a little help (but it goes into the general fund, of course).
However, I believe this money should be reserved for American citizens -- not for illegal aliens, naturalized citizens, or permanent residents. One of the requirements of residency is that you be self-supporting. That could mean you have a job lined-up before you immigrate here or you have relatives who will sponsor you AND provide you with financial support until you become self-supporting. Those here on student and worker VISAs should receive no financial aid, of course.
The problem with this bill is it makes non-citizens eligible for benefits that were historically reserved for citizens. If we fail to differentiate between citizens and non-citizens, it will get to the point where immigrants will see no benefit in citizenship at all. This is not the kind of country we want to live in. I would rather see this money go to US citizens. For instance, given the choice of helping illegal aliens or poor Southern Blacks, I would opt to help the Blacks. Wouldn’t you?
As far as moving authority from the Feds to the state, this is only for the residency requirement. The money comes from the Feds, hence from all of us.