This report, the second in a series on student financial aid, examines the effects of changes in the design of the Pell Grant Program on applicant eligibility over the 16 years between 1973-74 and 1988-89. The study is an outgrowth of a project undertaken in 1983-84 which attempted to identify the many decisions that constituted the design of each year's Pell Grant Program. The report's three main sections discuss the following topics and subtopics: (1) effects of changes on Pell Grant eligibility (presenting four dependent cases and four independent cases); (2) eligibility design components of the Pell Grant program (classes of eligible applicants, student aid index formula, allowable college costs, and payment schedule); and (3) implications for applicant eligibility (dependent gainers, and independent gainers and losers. It is concluded that, during the 16-year life span of the Pell Grant Program, Congress has shifted the focus of Pell Grants away from lowest resource aid applicants toward applicants from more middle income backgrounds, and this shifting focus will continue in the 1988-89 award year. Applicants whose income and assets produced the highest eligibility for Pell Grants have seen the maximum Pell Grant increase by 50% since 1975-76. During this same time period, the college costs they faced increased about 150%. Pell Grants have lost purchasing power since 1975-76 for six of the eight Pell applicant cases examined in this study. Eighteen figures are included and 19 tables are appended. Contains nine references. (SM)