NAICU Washington Update

$5,550 Pell Maintained for Next Academic Year

December 16, 2011

As Congress cuts deals to avoid a government shutdown and go home for the holidays, conferees on student aid spending have agreed to maintain the Pell Grant maximum at $5,550 for the 2012-13 academic year.  In order to keep the maximum grant this high and meet tight spending goals, however, Congress made tough choices to restrict Pell eligibility.

Pell Grant funding was one of the biggest hurdles for Congress in negotiating an omnibus appropriations bill, wrapping up nine of the 12 FY 2012 funding bills into one big holiday package.  Given that an additional $1.3 billion was needed to maintain a $5,550 Pell Grant maximum, and with partisan disagreements over health care and K-12 education spending, it was unclear whether Congress would deal with the Labor-HHS-Education bill, or punt with a long-term continuing resolution.

In the final bill, Congress maintained the $5,550 maximum grant through eligibility changes that generate the savings needed to fund this year's gap.  Here are the changes, effective July l, 2012:

  • The lifetime limit on Pell Grants will be reduced from 18 to 12 semesters
  • Ability-to-Benefit students will be eliminated from the program
  • "Auto-zero" Expected Family Contribution will kick in below $23,000, rather than $30,000
  • The highest earners in the Pell Grant program, who received a $555 grant, will be eliminated
  • The in-school interest subsidy on student loans for the six-month grace period following graduation will be eliminated temporarily (July l, 2012-July 1, 2014).

The NAICU board, in discussing changes to the Pell Grant program over the last two years, has held to the principles of maintaining a $5,550 maximum grant, protecting the poorest students, and ensuring eligibility policies help lead to completion.  NAICU member colleges have students in all the categories targeted for changes in this bill.  Most board members felt independent colleges would do all they could to ensure that any student losing Pell eligibility would be able to stay in school and work toward graduation.

Beyond this compromise, more cuts could be ahead. The consolidated appropriations bill is one of three bills in the holiday package the House is voting on today (December 16) and sending to the Senate for final approval.  The other two are a disaster relief bill, and a separate bill to help pay for that relief.  The consolidated bill also includes a 0.189 percent cut across all programs except Pell Grants; but the bill to pay for disaster relief includes an additional 1.83 percent cut across all programs including Pell. 

What this means for student aid is that the three bills include two across-the-board cuts to other education programs (including SEOG, Federal Work Study, TRIO and GEAR UP), and one that would cut the base funding for Pell in addition to the eligibility changes.  This is of great concern because these programs already have sustained multiple cuts over the last decade, and colleges budgets are stretching their budgets in order to make up the difference and keep low-income students in school.

As we post this report on Friday, it seems the wheels are finally greased for weekend adjournment.  However, as we've seen repeatedly over the past year, things can suddenly change.

NAICU will continue working with Congress and its higher education colleagues in revisiting the Pell Grant program structure and need analysis toward building a fiscally sustainable program that, at the same time, does the least harm possible to the neediest students.

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