The Wall Street Journal
By: Mary Pilon
December 14, 2010
Add this to Congress's year-end to-do list: Dealing with a potential $5.7 billion gap in grants for low-income students.
Federal Pell grants are a form of need-based aid typically given to low-income students. As part of student loan legislation passed in March, the amount of money that students can receive from a Pell grant maxes out at $5,550 for the 2010-2011 school year, and was scheduled to be the same amount for 2011-2012.
There's usually little political wrangling around funding for the Pell grant, but this year, lawmakers underestimated the surge in students going to college -- and their financial need -- helping to create the gap. Congress would need to authorize the additional billions to fully fund the program for all students who qualify for the aid. They've done so in the past, but the gap hasn't ever been this large and comes in the midst of a tense political climate.
"When need-based aid like Pell grants doesn't increase," says Mark Kantrowitz, publisher of FinAid.org, "the gap between low income students and everyone else increases faster. It has a big impact."
Some 7.7 million students received a Pell Grant in 2009-2010, according to the College Board, up from 6.2 million students the year before and nearly double the 3.8 million Pell recipients in 1999-2000. About 25% of recipients in 2009-2010 qualified for the maximum amount that year and the average grant was $3,646.
The gap in funding, according to the Congressional Budget Office, is $5.7 billion and could impact students as early as the fall of 2011. Some needy students would still receive grants, just much less than they might expect. Some students toward the top of the income eligibility scale would not qualify for aid at all if available money shrinks. For a student who qualified to receive the maximum amount, the maximum Pell grant would decrease from $5,550 to $4,705, should congress not act to increase funding. That could slash the award by as much as $845 a student and eliminate the Pell grant completely for thousands of students who may qualify for lesser amounts, according to the Institution for College Access & Success, a nonprofit student aid group. The difference between the cost of college and grant money could cause some students to rely on more student loans, a trend which has ballooned in recent years.
Spending for the shortfall has passed in the House, but has not yet been approved in the Senate. Even though Pell grants are given out each year, they're not entirely considered entitlements, such as Social Security, which means that their amount needs to be authorized by congress yearly. Legislation passed in March calls for Pell grant limits to increase steadily over the next decade and an increase to the total number of students who receive need-based grants.
In addition to students being impacted, this year's uncertainty could pose a problem for financial aid offices, which typically assemble student aid packages in February. "A reduction of this magnitude would be a great detriment to students," Justin Draeger, president of the National Association of Student Financial Aid Administrators, said in a letter to members last month.
Write to Mary Pilon at email@example.com