Obama to seek changes in Pell Grants

Education officials warn that Pell Grant cuts could force millions of students to drop out of college.

President Barack Obama’s budget plan would cut $100 billion from Pell Grants and other higher education programs over a decade through belt-tightening and use the savings to keep the maximum college financial aid award at $5,550, an administration official said.

Nearly $90 billion of the projected savings would be achieved through two changes, said the official, who spoke on condition of anonymity ahead of the Feb. 14 release of Obama’s 2012 budget.

The spending plan applies to the budget year that begins Oct. 1. Congress would have to approve both changes.

The first proposal would end the “year-round Pell” policy that let students collect two grants in a calendar year, with the second grant used for summer school.

The official said the costs exceeded expectations and there was little evidence that students earn their degrees any faster.

The change would save $8 billion next year and $60 billion over a decade, the official said.

A second proposal would reduce loan subsidies for graduate and professional students. That would free $2 billion next year and save $29 billion over 10 years, according to the official.

Education organizations expressed concern about the Pell Grant reduction proposal just hours after it was released to the public.

Molly Corbett Broad, president of the American Council on Education (ACE) said the Obama administration’s Pell Grant adjustments should be seen as a long-term effort to shore up the Pell Grant program’s “financial underpinning.”

Corbett Broad said the plan to cut Pell Grant funding would be met with skepticism by many in higher education. She added that ACE would “support the overall objective of ensuring a viable array of student aid programs anchored by the indispensable Pell Grant program.”