On July 2, 1862, Congress passed the Morrill Land Grant Act, introduced by Vermont Representative Justin Morrill. The act established land-grant status and funding for selected colleges and universities across the country.

In anticipation of congressional approval of the bill, and in recognizing that the proposed legislation spoke only in the terms of “colleges” and “universities,” then-school President Evan Pugh pushed for a new name for the institution. In spring of 1862, Centre County court approved the new name—Agricultural College of Pennsylvania.

Since the Morrill Act defined agricultural education as a primary purpose for institutions utilizing the act, the Agricultural College of Pennsylvania became eligible for the benefits under the act. And on April 1, 1863, Governor Curtin signed a bill naming the Agricultural College as the sole recipient of the Commonwealth's land-grant revenues.

After President Pugh's death in 1864, the College experienced nearly 20 years of drift and instability that threatened its very existence. In 1882, with the hiring of George Atherton as the school's seventh president, the College reaffirmed its commitment to the land-grant ideal.

In fact, it was Atherton’s major goal to secure recognition and support from the Commonwealth for its land-grant college. In his inaugural address, Atherton insisted that the college should be “an industrial and scientific rather than a classical and literary institution.” Also, with the rise of industrial opportunity in the nation and especially in Pennsylvania, Atherton came out strongly for placing the “mechanic arts” as being of equal importance as agriculture. 

The Morrill Act was defined by Congress as “An act donating public lands to the several States and Territories which may provide colleges for the benefit of agriculture and the mechanic arts.” Every state accepting the terms of the act received an allotment of 30,000 acres for each of its senators and representatives in Congress. The state was to invest the funds from the sale of the land and this income would then be used to establish and endow its institution.