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A Blog from New America's Federal Education Budget Project

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House Budget Committee Lays Out Options on Pell Grants

Published:  May 5, 2011

Some clues are emerging about how House Republican leaders plan to deal with the budget crisis in the Pell Grant program in fiscal year 2012. In the report accompanying the fiscal year 2012 budget resolution that the House of Representatives approved last month, the House Budget Committee lays out policy options for lawmakers to consider as the appropriations process moves forward.

Perhaps most significantly, the budget committee’s Republican members make clear that they want to deal with the program’s budget crisis with both cuts to the maximum award and targeted changes within the program to lower costs. This blueprint stands in stark contrast to the approach that President Obama laid out in his fiscal year 2012 budget request, which aims first and foremost to keep the maximum award at its current level of $5,550.

Here are some of the options that the Budget Committee says are worth considering (remember these aren’t actual legislative proposals, as budget resolutions are not legislation; they merely provide a framework for spending bills Congress will consider later this year):

  • “Adopt a sustainable maximum award level”: They say that the current level of $5,550 is “more generous” than the government can afford. While they do not specify how big a cut is needed, they have said elsewhere that they want to “return Pell Grants to their pre-stimulus levels.”   Prior to passage of the “America Recovery and Reinvestment Act” in 2009, the maximum grant was $4,731 resulting in a total cost of $16 billion. That’s less than half of today’s total program cost of $34 billion.
  • “Set stricter lifetime limits”: They recommend reducing the number of years students can receive the grants from nine years (18 semesters) to six years (12 semesters), or the equivalent for part-time students.
  • “Roll back certain recent expansions to the Need Analysis to ensure aid is targeted to the truly needy”: They call for reversing changes that Congress made to the eligibility formula for Pell Grants under the College Cost Reduction and Access Act of 2007. The law increased the income threshold from $20,000 to $30,000 in the formula that automatically qualifies an applicant for the maximum grant award, and allowed applicants to exclude more of their income when applying for a grant. These changes were meant in part to help financially-needy students who were working their way through college remain eligible for federal financial aid.
  • “Eliminate administrative fees paid to participating institutions”: They recommend eliminating the $5-per-grant payment that colleges receive from the government for administering the Pell Grant program. “Schools already benefit significantly from the Pell program because the aid makes attendance at these schools more affordable,” they state.
  • “Consider a maximum income cap”: They note that the Pell Grant program does not have a “fixed upper income limit” for students to qualify for the grants. According to the U.S. Department of Education, about 1.1 percent of Pell Grant recipients come from families making over $60,000.
  • “Eliminate eligibility for less than half-time students": They argue that “funding should be reserved for students with a larger commitment to their education.”
  • Terminate eligibility for those who currently receive the minimum award”: They note that Pell-eligible students with the least financial need are eligible to receive a minimum grant of $278, “which is unlikely to have much, if any, impact” on their ability to afford college. Funding, they say, “should be more effectively targeted” to those “who need it the most.”

As the report accompanying the House-passed fiscal year 2012 budget resolution shows, the House Republicans have much different priorities than the Obama administration. While the White House is committed to maintaining the current maximum award with a combination of spending increases, eligibility changes, and cuts to other student aid programs, the Republican leadership in the House does not support maintaining the maximum grant and current funding levels. Instead, the lawmakers would deal with the growing costs by reducing the size and cost of the program overall, making it less expensive and less generous.

As the fiscal year 2012 appropriations process gets underway, this promises to be a huge battle that could bring the biggest changes to the Pell Grant program since its start nearly forty years ago.

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