After looking through help files and forums, I finally came out with the solution to my problem (with the help of many online contributors of course). The solution, as expected, has to do with the rest ring that eagle sets.
Initially the rest ring was set at a min value of 10 mil for my DRC file. I lowered the value of that to 6 mil to avoid overlap on the header.
NOTE ON THIS: BE CAREFUL WHEN SETTING MIN HERE BECAUSE EAGLE SETS THE MIN FOR THE WHOLE BOARD, SO OTHER COMPONENTS WILL ALSO BE AFFECTED. FOR MY CASE, EVERYTHING CHECKED OUT GOOD, BUT TAKE CARE IF YOU USE THIS SOLUTION.
I think it would be more convenient if you could individually set the rest ring size for specific components since you have components of different sizes on the board, however, I don't know if eagle has such capability. Please correct me if I am wrong.
Anyways, hope this helps someone else out there. I spent quite a bit of time trying to find a better solution than just modifying the rest ring size for the board, however, I wasn't able to find anything else.
Also, for those who didn't read the comments on this question, here is another resource for anyone who has stumbled here with a problem with Via diameters: VIA DIAMETER PROBLEM
To add to the solutions. I re-posted this question one element14 community forums for Eagle. Here is the response I got.
You can do this without a schematic. Open PcbNew and click on at the right hand side. This will allow you to add any footprint, such as a 1x1 pin header. Make sure your grid is 100 mil. As a proof of concept, I used the 1x5 pin headers .
Best Answer
It's the IPC-7351B - "Generic Requirements for Surface Mount Design and Land Pattern Standard"
The document only provides recommendations; there is no enforcement. However, more and more manufacturers seem to be using it to inform their footprint suggestions.
Note that this spec isn't easy to use directly. Instead of tables of land pattern dimensions, you see sections like this (take from a previous version of the spec):
....
Instead, I use a software called Library Expert. It's free and quite useful. It creates footprints to the IPC-7351 spec. It will actually build up the symbols for a number of software packages, e.g. Eagle, OrCAD, Altium, and others.