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A Blog from New America's Federal Education Budget Project

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Obama Budget Punts on Tough Choices for Pell Grants

Published:  April 10, 2012

Many student aid advocates and pundits have panned the House Budget Committee’s loosely outlined funding plan for Pell Grants. The plan was part of the fiscal year 2013 budget resolution (aka the “Ryan Budget”) that the House passed a few weeks back. Critics say it would make deep cuts to Pell Grants and kick a million students out of the aid program. Indeed, the House Republican proposal would make some changes to the program to permanently address a $7 billion funding cliff that the program will face in 2014. But where were these critics when President Obama outlined his Pell Grant funding proposal earlier this year?

The president’s proposal included only a one-year fix for the massive $7 billion Pell Grant funding cliff. After the one-year fix, the president’s budget simply assumes that an extra $7 billion will materialize in the annual appropriation for Pell Grants each year. But this extra funding must be offset by $7 billion in cuts to other programs funded with annual appropriations, which the president’s budget doesn’t specify.

Do student aid advocates really believe the president’s “let’s not make tough decisions now; we’ll find an extra $7 billion later” is the better proposal?

Sure, the president doesn’t propose any eligibility changes for Pell Grants or big cuts to other aid programs to address the funding cliff, so it might appear to be a better deal for students come 2015. But student aid advocates are taking a big gamble because the appropriations spending caps in place under the Budget Control Act require that any big increases in appropriations spending on one program must be offset by spending cuts to other programs (tax increases cannot be counted as an offset). It should be noted that the president’s budget would “turn off” the across-the-board (sequestration) cuts pending for 2013 and cancel the lower annual appropriations limits, both triggered by last year’s supercommittee failure.

The president does not call for a $7 billion increase in overall appropriations spending each year to accommodate Pell Grant costs. Instead, the president proposes to keep the annual appropriations limits set in the Budget Control Act of 2011. Those spending limits effectively locked in the 2011 Pell Grant appropriations funding levels for future years—about $22 billion annually. That means the president and lawmakers must offset his proposed $7 billion increase over that amount with $7 billion in cuts to other programs in 2015 and every year thereafter.

Those cuts could come from anywhere, including other education programs. Not even a Democratic Congress opted for that route when they had to address a similar Pell Grant funding cliff in 2010.

More importantly, the Congressional Budget Office won’t give the president’s budget credit for its Pell Grant funding plan past 2014. When the president or Congress promises to increase appropriations for one program in the future while promising to cut unspecified other programs by the same amount, the budget agency considers that to be more political posturing than a concrete proposal. In response, CBO will only measure total appropriations funding in a budget proposal. Since the president did not identify specific cuts in non-appropriations funding to offset the $7 billion increase past 2014, the official estimate from CBO shows that the president’s proposal, or lack thereof, cuts Pell Grant funding dramatically in 2015. The next year, total funding will be half what it was in 2012.

Why isn’t the press covering this like they are the House Pell Grant proposal? Why aren’t student aid advocates up in arms?  Where are the PreK-12 education advocates whose favorite programs might be called on to absorb the unspecified $7 billion in funding cuts the president’s budget envisions to support Pell Grants? Can President Obama fairly claim that the House-passed budget would cut Pell Grants by $1,000 per recipient when his lack of a proposal would, according to the Congressional Budget Office, cut them by much more?

That’s the most disappointing part of this whole story. The president punted on a long-term plan to shore up Pell Grants because he could be criticized for making tough choices. Then, when House Republicans put out a feasible, gimmick-free Pell Grant proposal that makes tough choices (i.e. cuts to other aid programs and eligibility changes) needed to fund the program for the long-term, the president didn’t attempt to work with them, but lambasted them instead.

Maybe the president doesn’t see the House proposal as a constructive, move-to-the-middle plan. In that case, he is free to propose his own long-term solution and show how he’d pay for it. The future of the Pell Grant program and the students who will rely on it would benefit from a more robust discussion.

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