NAICU Washington Update

Tough Calls on Pell Explored in Two House Subcommittee Hearings

March 23, 2011

The House Labor-HHS-Education Appropriations Subcommittee recently held two hearings focusing on Pell Grant funding, with Education Secretary Arne Duncan testifying on March 10, and Undersecretary for Postsecondary Education Martha Kanter testifying March 15.  Both defended the administration's Pell Grant Protection Act, which was submitted to Congress as part of its FY 2012 budget request.

The Pell Grant Protection Act would maintain the maximum grant at $5,550.  The plan would, however, rein in the exploding costs of the program by eliminating the "year-round Pell" provision, and the in-school interest subsidies on graduate student loans; reforming the Perkins Loan program; requiring IRS income data matching on student aid applications; and allowing further consolidations of FFEL loans to direct loans.

During the hearing on the overall Department of Education FY 2012 budget, Chairman Denny Rehberg (R-Mont.) asked detailed questions on how to fund the Pell Grant program, including funding it directly out of the Labor-HHS-Education allocation.  He asked Secretary Duncan if he would prefer Congress cut other Department programs by 15 percent, or reduce the maximum grant by $845, as proposed in H.R. 1. The Secretary answered "neither," and further touted the proposals in the Pell Grant Protection Act.  Rehberg expressed concern that the administration's proposals would need to go through the regular legislative process via the authorizing committees before appropriators could reflect those changes in their bill.

The March 15 hearing a few days later focused specifically on the Pell Grant program.  The hearing was intended to acknowledge the rapid growth in participation and cost of the program, and to "identify possible solutions to bringing down the cost," as the Rehberg said in his opening remarks.  Kanter highlighted facts about the recent growth in the program, noting the 52 percent increase in recipients since 2008.  With no changes in the program, she said, there will be a $20 billion funding shortfall.  She went on to explain that if the program is funded at $17.5 billion, the maximum grant will drop to $2,220.  Ranking Member Rosa DeLauro (D-Conn.) noted that cutting the maximum grant that much would take the program back 38 years in purchasing power.

Rehberg posed a series of questions to get certain elements of the program on the table for discussion.  He asked about how long a student can receive Pell without getting a degree; whether or not the stimulus increase should become permanent; and the use of Pell in remedial courses.  He also expressed concern that the education authorizing committees could not work through permanent changes to program features quickly enough to make them a viable alternative to cutting the maximum grant.  The administration's answers, however, usually led back to promoting their budget proposal. 

Both parties and both chambers are aware of the exploding costs in the Pell Grant program.  It is NAICU's understanding that the authorizing and appropriations staff in both the House and Senate are working toward a proposal that would maintain the highest maximum grant possible, while at the same time trimming the costs of the program.  Their goal is to have legislative language that could be attached to the final negotiations of the FY 2011 continuing resolution that will fund the federal government for the remainder of the current fiscal year.

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