Budget Deal Protects Pell, But with Savings Elsewhere

Updated Dec 19, 2011
U.S. Rep. George Miller, D-Calif., is the senior Democrat on the House Committee on Education and the Workforce. U.S. Rep. George Miller, D-Calif., is the senior Democrat on the House Committee on Education and the Workforce.

Breaking a budget stalemate, Congress has agreed on a fiscal 2012 funding bill that would preserve the maximum Pell Grant at $5,550 but make changes in eligibility that may reduce or eliminate aid to thousands of students.

The bill averts a feared government shutdown one week before Christmas, funding dozens of federal education programs that had operated with only temporary funds since the Oct. 1 start of the new fiscal year.

“This funding bill is not perfect. It is a compromise,” said Rep. George Miller, D-Calif., the senior Democrat on the House Committee on Education and the Workforce.

The neediest college students won one critical fight when lawmakers agreed to maintain the current maximum Pell of $5,550. Earlier this year, some budget cutters had sought reductions of up to $2,000 in the top grant along with eligibility changes.

While the maximum grant stays the same, however, the eligibility changes could affect 100,000 students, says The Institute for College Access and Success (TICAS), which analyzes student aid and debt levels. The institute said many of these changes “would disproportionately harm African-American students and transfer students, including those near graduation.”

Among other provisions, the changes would limit to 12 semesters the length of time a student could receive a Pell Grant. Under existing law, students can receive aid up to 18 semesters. TICAS was particularly concerned that the change would take effect right away.

“An immediate retroactive time limit is like changing the rules in the middle of a game and then scoring the entire game based on the new rules,” said Pauline Abernathy, TICAS vice president.

The new policy also would not take into account time spent in required remedial courses, which slow the college progress of many underprepared students and those from high-poverty high schools. About 40 percent of Pell Grant recipients take remedial courses, the institute said.

But in his summary of the plan, Rep. Hal Rogers, R-Ky., chairman of the House Appropriations Committee, said the new time limits and other eligibility changes were “common sense reforms” to promote Pell’s financial stability in future years.

Another change is in the family income level at which students become eligible for the maximum Pell. Currently, a student receives the maximum grant if his or her family earns less than $30,000. But the new budget bill would reduce that level by nearly 25 percent, meaning that families could qualify for maximum aid only if they have incomes below $23,000.

Another change would deny Pell Grants to students without a high school diploma or General Equivalency Diploma (GED). This change is likely to affect young adults seeking federal aid to study technical programs at community colleges or trade schools.

While he welcomed an agreement to avert a shutdown, Miller acknowledged that “difficult policy choices were made in the Pell Grant program. While they averted even worse cutbacks, the impact of those choices must be monitored carefully over the next year.”

Overall, the eligibility changes are designed to save about $11 billion over the next decade, lawmakers said. In one additional tweak to achieve savings, TICAS said, the bill would eliminate the six-month grace period between the time students leave college and the time they must begin repaying their federal student loans. The change would affect those taking out Stafford loans in the 2012-2013 and the 2013-2014 school years.

TICAS noted that the interest rate for these loans already is set to double from 3.4 percent to 6.8 percent, “increasing the cost of borrowing by thousands of dollars for those who can least afford it.”

The House overwhelmingly approved the spending bill, H.R. 3671, by a vote of 296-121 on Friday with the Senate approving the measure on Saturday.