Final answer:
Pell Grants are treated by public institutions as educational support funds that college students can use for tuition at any accredited institution, be it public, private, secular, or religious.
Step-by-step explanation:
Public institutions treat Pell Grants as receipts for educational support that students can use at their discretion for tuition, regardless of whether the institution is public or private, secular or religious. Pell Grants are a form of transfer payment, providing important financial aid that does not require direct reciprocation in goods or services from the recipients; instead, it enables them to participate more fully in the economy by facilitating their educational pursuits.
This distinction in the treatment of Pell Grants compared to vouchers for K-12 education may stem from the Supreme Court's view that college and university level students are more capable of making decisions independently from religious influence, as compared to younger students. Additionally, unlike vouchers, Pell Grants do not carry the same potential issues with the constitutional prohibition of government support for religious activities due to the eligibility of a range of accredited institutions imparting higher education.