Five options to simplify the needs assessment formula for Pell Grants are discussed, along with validation alternatives. Analysis focuses on three main effects of simplifications (data element reduction): the impact on the distribution of total Pell funds, the impact on individuals receiving Pell awards, and the impact of reducing error in the disbursement of Pell funds. Two data sources are used for the analysis: a sample of 1980-1981 recipients selected as part of the Pell Grant Quality Control study, and a sample of 1978-1979 applicants who did not reach recipient status. The efficacy of three validation options are examined: 100% validation using Internal Revenue Service 1040 forms, targeted validation using error-prone models, and expansion of current pre-established criteria targeting. Thirteen dimensions are used to assess each option including the number of data elements that colleges are required to verify through review of student-provided documentation, student burden, and institutional burden. The advantages/disadvantages of two additional validation options are also considered: validation of non-filing applicants, and validation of all corrections. Current policy and options for determining student dependency are addressed. Half the document consists of six appendixes providing summary tables for the simplification options and background data for each of the five options. (SW)