College & Workforce Readiness

Lawmakers, White House At Odds Over Pell Grant Hike

By Sean Cavanagh — May 01, 2002 4 min read

They have paid tuition, defrayed the financial hit from room and board, and helped millions of college students cover costs they couldn’t on their own.

But the popularity of Pell Grants has carried a price. Once again, federal lawmakers face vexing questions about how much money to put into the landmark financial-aid plan, the largest single grant program in the country for post- secondary low-income students. Many observers say a Pell Grant simply doesn’t pay for as many college expenses as it once did.

This year, the White House and some members of Congress are at odds over whether to raise the maximum per- student award in the future, even as they debate whether to make up an existing shortfall in funding.

A bipartisan group of at least 47 lawmakers called in April for more money to be put into Pell Grants, enough to raise the maximum award from $4,000 to $4,500 per student.

They say the value of the average grant, adjusted for inflation and the climbing costs of a college education, has decreased by at least 20 percent since 1975.

Pell Grants, named for former Sen. Clairborne Pell, D-R.I., who championed student financial aid programs, “are the cornerstone of many students’ financial-aid packages here in Wisconsin and around the country,” said Sen. Russell D. Feingold, D- Wis. “Without Pell Grants, many individuals simply can’t consider college.”

The chances for boosting the per-student grant, however, are questionable at best. President Bush has opposed increasing the size of the maximum grant, noting in his fiscal 2003 budget proposal that the top per- student award has risen more than 20 percent in three years.

And the Bush administration says Congress should have another priority: making up the $1.3 billion shortfall in the Pell Grant program for the current year. Congress erred, the administration contends, when it raised the maximum per-student award to $4,000 without providing enough overall funding to pay for it.

As a result of the shortfall, the Pell Grant program provides for a maximum per- student amount of only $3,600 this year, administration officials say.

“When Congress wrote the check for the Pell Grant program last year, it was returned marked ‘insufficient funds,’” Deputy Secretary of Education William D. Hansen told attendees at a financial-aid conference in Baltimore in March. “We’ve asked for $1.3 billion ... to make up for the underfunding, but Congress needs to provide the funds to pay for this.”

To make up the difference, the administration asked Congress to consider finding cuts in the labor, health and education portion of the fiscal 2002 budget. The administration suggested cuts in earmarks and other “low-priority” projects.

For next year, the administration proposes spending $10.9 billion on Pell Grants, an increase of $549 million, to cover a maximum award of $4,000.

Tom Wolanin, a senior associate at the Institute for Higher Education Policy, believes the two sides will make up the shortfall, though likely without touching earmarks.

“To not provide the supplemental funding would disappoint students and school officials across the country,” said Mr. Wolanin, whose Washington-based organization promotes access to higher education.

Pell Grants were created by Congress 1972 as the Basic Educational Opportunity Grant program, and took effect a year later. This year, more than 4 million students are expected to receive the assistance, given to students on the basis of a formula relying primarily on how much families can pay toward higher education.

The maximum Pell Grant amount has risen steadily, increasing from $2,400 in 1992-93 to $4,000 today— but not enough to keep up with college costs, say student-aid experts. Today, the grant covers only about 39 percent of the average student’s cost of tuition and on-campus room and board at a four-year public institution, as opposed to 77 percent of those costs in 1979-1980, according to a recent American Council on Education study.

Adding to those woes, students today rely more heavily on loans, rather than grants, financial-aid advocates contend. The College Board found that loans now represent more than 58 percent of all student aid, compared with just 41 percent in 1980-81.

During tough economic times, interest in Pell Grants—which do not have to be repaid—tends to jump, said Brian Fitzgerald, an adviser to Congress on financial-aid issues. As parents lose work, more families qualify for financial aid.

Shrinking state budgets only compound the strain on students and families, as public universities tend to raise tuition. The average cost of tuition and fees at public four-year colleges has risen from $1,647 in 1980-81 to $3,754 today, a College Board study says.

Despite the current budget standoff, Mr. Fitzgerald said Congress could end up raising the maximum Pell Grant award to at least $4,250, regardless of whether the federal lawmakers backfill the current year deficit.

Trent Duffy, a spokesman for the White House’s Office of Management and Budget, said that he hopes Congress would cover the shortfall, but that it is too early to speculate.

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A version of this article appeared in the May 01, 2002 edition of Education Week as Lawmakers, White House At Odds Over Pell Grant Hike

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