Published Online: January 9, 2012
Published in Print: January 11, 2012, as Budget Deal Ushers in New Pell Grant Eligibility Rules

Budget Deal Ushers in New Pell Grant Eligibility Rules

Despite concerns about the prospect of deep cuts in Pell Grants to help low-income students attend college, the final fiscal 2012 federal budget preserves the maximum grant at $5,550—much to the relief of many in higher education. But changes in eligibility drop some students from the federal aid program and reduce grants for others.

The changes include limiting student eligibility to 12 semesters, down from 18; requiring students have a high school diploma or General Education Development, or GED, certificate to qualify; and increasing the family-income level from $23,000 to $30,000 for an automatic maximum grant. Estimates vary, but about 100,000 to 150,000 of the program's nearly 10 million recipients are expected to be affected by the new criteria, which go into effect July 1.

Those restrictions come on top of last year's elimination of the year-round Pell Grant, which cut off funding for students who enrolled in the summer.

To raise additional money, the 2012 budget also temporarily suspends the six-month after-graduation grace period for loan repayments on the separate federal Stafford Loans for the academic years 2012-13 and 2013-14.

Congress opted for eligibility changes in the Pell Grant program over the deep cuts that had been considered, said Terry Hartle, a senior vice president in the division of government and public affairs for the American Council on Education, in Washington. "It could have been a whole lot worse," he said.

Still, Mr. Hartle said the changes are significant. "There is no way to make changes in Pell Grants without students being affected. The only way to save money is because you are taking money from some," he said.

Advocates worry that some student will be forced to go to part-time attendance, increase their work hours, or drop out of college. Lauren Asher, the president of the nonprofit Institute for College Access & Success, which has offices in Oakland, Calif., and in Washington, said the retroactive change to lifetime eligibility will be especially harmful, abruptly ending funding for many students and disproportionately hurting low-income or minority students.

"People don't realize how crucial aid is to access and completion," said Ms. Asher. "It sends the exact wrong signal to cut aid when we need more people, especially those who are low income, to get through college." Students with Pell Grants are twice as likely to have student loans than other undergraduates, Ms. Asher added, and grants today cover only about one-third of the cost of college.

Ballooning Demand

As demand for Pell Grants has ballooned during the poor economy, Congress has looked at ways to contain costs.

The Pell budget grew from $14 billion in 2007 to an estimated $41 billion in 2012. There were proposals to significantly reduce the amount of the maximum grant, but a grassroots lobbying effort and support from the Obama administration helped fend that idea off. Indeed, Pell came out ahead in the August 2011 budget-deficit negotiations, despite proposals for major cuts.

But Congress later decided to deny Pell Grants to students without a high school diploma or GED. Currently, students who pass an entrance test showing they have an "ability to benefit" could apply for a Pell Grant; that ends in the fiscal 2012 budget.

"We are very disappointed with the outcome on the ability-to-benefit issue," said David Baime, the senior vice president for government relations and research at the American Association of Community Colleges, in Washington. "It's very difficult for older students to get a GED before entering community college," he added, and in many states, there are waiting lists to get into a GED program.

Mr. Baime said students without a GED can still enroll in community colleges, but without a Pell Grant, it will be harder for many to pay for school. The AACC estimates that 1 percent of community college students, or 40,000 individuals, will be affected by the change.

Patricia Hurley, an associate dean of student financial-aid services at Glendale Community College, in Glendale, Calif., said the ability-to-benefit change will affect about 500of the school's 18,000 students.

"It's not a large percentage, which is why the recommendation went through," Ms. Hurley said. "But on an individual basis, it's shutting the door to higher education on those who don't have many other options."

J. Noah Brown, the president and chief executive officer of the Association of Community College Trustees, based in Washington, said the growing success of the program invites scrutiny. But he is not sympathetic with the tack Congress has taken.

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"You don't cut your way out of a recession," said Mr. Brown. "The Pell Grant program is one of those critical investments that you must sustain and enlarge if you want to have an impact on turning the economy."

Most Pell awards are given to students with household incomes of $30,000 or less. One-third of recipients attend a community college, and many are nontraditional students and attend part time.

The 2012 budget also eliminates awards of less than 10 percent of the maximum, which comes to $550. While there are few such awards, Mr. Brown said they help students struggling to afford just one or two classes.

"It makes a tremendous difference to them," he said. "They are the most vulnerable students on our campuses."

Rich Williams, a higher education advocate for the U.S. Public Interest Research Group, in Washington, said the changes will especially hurt those students "blindsided" by having their eligibility end July 1. He said the budget puts the Pell program in good shape for now, but warns that when the mandatory funding runs out in 2014, it will face a "pretty big cliff" that will need to be addressed.

Vol. 31, Issue 15, Page 18

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