143,000 students to lose Pell Grant funding in 2012

An analyst says Congress 'knowingly' underfunds Pell Grants.

Congress’s latest omnibus spending bill will effectively eliminate federal Pell Grant funding for an estimated 143,000 low-income college students starting in July. The Pell Grant cuts come just a month after budget estimates showed the popular program would run a surplus in 2012.

The Republican-controlled House of Representatives and the Democratic-controlled Senate passed a $1 trillion spending measure Dec. 19 that included major changes to Pell Grant eligibility.

Students who take more than six years to earn a college degree no longer will qualify for Pell Grant money, meaning 63,000 recipients will have to look elsewhere for tuition. The former eligibility cap was for students who had taken nine years to finish school.

The Congressional changes also will eliminate Pell Grant awards of $277 to $550, and students without a high school diploma or GED will not receive Pell funding, even if they pass the “ability to benefit” test once used to secure Pell Grants. That provision alone will remove 65,000 students from the Pell Grant program.

The changes to Pell Grant qualifications will “blindside” students when they go into effect July 1, said Rich Williams, higher-education advocate for the U.S. Public Interest Research Groups (PIRG), which published a report on the impact of the Pell Grant shifts.

“At a time when student debt is at an all-time high, Congress has failed to deliver on an agreement [that] helps struggling students pay for college and make it to graduation,” Williams said.

The Congressional bill also reduces the income level under which a student will be eligible to receive the maximum Pell Grant amount, from $30,000 to $23,000, and it eliminates a six-month grade period on federal student loan payments.

Congress’s tightening of Pell Grant eligibility comes a month after federal budget numbers showed that Pell Grants had been slightly overfunded for the fiscal 2012 year.

This proved a marked difference from recent years, when lawmakersknowingly underfunded the program, throwing fuel on the Pell Grant funding fire,” according to the New America Foundation’s Higher Ed Watch, which tracks federal education policies.

Jason Delisle, director of NAF’s Federal Education Budget Project, wrote in a Dec. 6 blog post that in 2010 and 2011, Congress funded Pell Grants according to early Congressional Budget Office (CBO) estimates that were well below the necessary amount.

Congress must abide by the early CBO estimate for non-entitlement programs like Pell Grants, Delisle wrote, allowing lawmakers to keep funding as low as possible.

“But knowingly underfunding Pell Grants has helped to fuel the crisis-like atmosphere that surrounds the program’s annual appropriation,” he wrote.

In the final months of 2011, it was clear that the Pell program would have surplus funds for upcoming fiscal years.

Delisle, two weeks before Pell Grants saw drastic changes in Congress, called the overfunding a “rare bit of good news for Pell Grants indeed.”

Pell Grants have run a surplus more times than the program ran a deficit since the early-1990s, according to The Institute for College Access and Success (TICAS).

Pauline Abernathy, TICAS vice president, said cutting off Pell Grant funding for students who have taken college courses for six years will interrupt thousands of degree tracks without warning.

The new six-year limit doesn’t include provisions for students who have needed non-credit bearing remedial classes before they qualify for courses worth credit, Abernathy said.

“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,” she said. “After years of studies, students who are depending on Pell Grants to cross the finish line will suddenly be sidelined.”

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