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Ed Money Watch

A Blog from New America's Federal Education Budget Project

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Revisiting Ryan Versus Obama on Pell Grants

Published:  August 14, 2012

This post was updated August 18th to reflect possible higher costs for the Ryan Pell proposal

All eyes are back on the Pell Grant proposal in the Ryan budget (the House-passed fiscal year 2013 budget resolution) now that Rep. Paul Ryan (R-WI) will be Governor Mitt Romney’s running mate. It goes unmentioned, however, that when it comes to Pell Grant funding, both Ryan and Obama are making promises that they cannot possibly keep.

The plan Rep. Ryan included in his fiscal 2013 budget resolution would make a series of eligibility changes to the program, end the portion of the program’s budget funded as an entitlement, and cancel the next five years of inflationary increases to the maximum grant. (Click here to view a side-by-side comparison of Ryan's proposed changes.) The plan also assumes that Congress will support a maximum grant of $5,550 each year through the appropriation process.

Based on our estimates, that would require an annual appropriation of about $28 billion (maybe even $30 billion), taking the eligibility changes into account. While that is less than what the program currently costs in total, it is about $6 billion more (or possibly $8 billion more) than what Congress typically provides through the appropriations process. Assuming such a big increase in funding for the Pell Grant program seems like a tall order given that the Ryan plan also assumes reductions in total appropriations spending as compared to the current trajectory.

Now the Obama plan. The president proposes no eligibility changes to the program and would keep the entitlement funding portion intact, along with the inflationary increases in the maximum grant. To do so, the president would temporarily allocate additional funding to the program – but for only one year by cutting funding to other programs (mainly student loans). In 2015 and each year thereafter, President Obama’s plan assumes Congress will support the program with an annual appropriation of $32 billion, or $10 billion more than what Congress typically provides.

That is essentially the same unrealistic proposal that the Ryan plan lays out – both plans hinge on Congress making annual appropriations for the program that are higher than they are today, year after year, meaning that some other program(s) must be cut by the same amount. What should Congress cut to pay for that kind of increase? Neither candidate has said.

Sure, the Obama plan spares students from eligibility changes and includes a small increase in the grant, and the Ryan budget does not. But President Obama’s promised Pell Grant benefits should hardly reassure students, families, and education advocates, given that his plan amounts to little more than a heroic assumption about future funding. Yet these groups seem all too eager to let the president get away with proposing a budgetary near-impossibility, while taking Rep. Paul Ryan to task for proposing effectively the same thing.   

If the president’s supporters think that they are acting in the best interest of soon-to-be Pell Grant recipients by trashing the Ryan budget and touting the Obama plan, they are deluding themselves. The Pell Grant program is headed for a fiscal cliff that lawmakers cannot avoid by assuming more money will materialize. It’s going to take real money, which means advocates and policymakers need to start making real tradeoffs. So far, neither Ryan nor Obama has made those tradeoffs, and Pell Grant supporters shouldn’t give only one of them a free pass.

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