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Congress is Going the Wrong Way on the Road to Investing in America's Future

Dec 19, 2011

By Vickie Choitz

The Fiscal Year 2012 appropriations bill that Congress recently passed will make it more difficult for the lowest-income students to access postsecondary education and gain the skills and credentials they need to support their families and contribute to the economy.

The bill, simply put, is the wrong direction. It reduces funding for Pell Grants and workforce investments, in spite of increasing need. And it fails to protect students' eligibility for student aid, creating educational dead ends for the most vulnerable students.

Students who do not have a high school diploma or equivalent are one of the most vulnerable groups. Currently these students are eligible for aid if they prove their ability to benefit from college by passing an approved exam or successfully completing six credit hours. The bill permanently eliminates student aid eligibility-grants and loans-for new students lacking a high school credential as of July 1, 2012. Denying federal aid to these students seriously undermines promising new career pathway strategies that integrate basic skills education and occupational training so that even those without a high school diploma or GED can access Pell Grants to support a fast-track to credentials and family-supporting jobs.

By eliminating this option, Congress is creating an additional step that will bog down these students in a long sequence of basic skills, English language and GED-preparation programs. This will especially hurt low-income adults-such as displaced workers and immigrants-who do not have the luxury of spending years in school; they need to work to support themselves and their families.

Besides ending aid to those without a high school credential, the legislation reduces the income level at which students automatically qualify for an Expected Family Contribution of zero from $32,000 to $23,000 starting in the 2012-2013 school year (they still have to meet a second test of need, e.g., eligible for public benefits like food stamps). This means that a significant number of very low-income students will have to go through the complex process of proving that they have too few resources to contribute to their college education, even though it's clear from their extremely low incomes and their eligibility for public benefits.

This punitive change is directly aimed at the lowest-income students and risks their ability to access student aid and postsecondary education. Research shows that making the financial aid application process more complex reduces the number of eligible students who ultimately receive aid because low-income students often lack the assistance and guidance required to complete the complicated paperwork. Single parents will be among those hardest hit by this change. The change also will drive up the costs of administering financial aid due to the additional work of determining and verifying student need.

The bill makes a third eligibility change with serious consequences for low-income students.  It reduces the number of semesters a student can receive a Pell Grant to 12 from 18 semesters, starting with the 2012-2013 school year (this change does not affect student loans). This is a retroactive change that affects all students whether they are one semester from graduating or just starting college. It does not consider students who need remedial education or students who have transferred institutions, which means that they legitimately need more time to reach graduation.

Despite these damaging changes, it could have been worse. The House introduced a draft appropriations bill in September that, in addition to changes similar to those above, proposed to slash the levels of income students could protect for basic living expenses in the aid formula, unfairly add non-income public benefits to the definition of income in the formula, and cut off Pell students when they have to enroll less-than-half-time - for a grand total of $44 billion in cuts to the program over 10 years.

Fortunately, the Senate proposed a plan to fill the remaining funding gap in the Pell Grant program in fiscal year 2012. Instead of cutting Pell Grants for the lowest-income students, it reluctantly proposed to eliminate the interest subsidy on student loans during the six-month grace period before loan repayment begins. It is less harmful to slightly increase the cost of student loans, which would be very modest, for low- and moderate income students than to significantly reduce grants and/or eliminate eligibility for the lowest-income students. This change was adopted in the final appropriations bill, but the elimination is temporary and the interest-free subsidy period is restored after two years.

Looking forward to fiscal year 2013, which starts in October 2012, the 2013 reauthorization of the Higher Education Act and beyond, Congress has a choice: continue in the wrong direction on the road to America's future or turn around and make the smart investments. At a time when lower-skilled workers have the highest unemployment rates and more and more jobs require at least a postsecondary credential, it is in the best interest of the nation to help students and workers access Pell Grants and attain the skills and credentials they need to support their families, strengthen their communities, and grow our economy.

See related article: Workforce Funding Avoids Damaging Cuts >>

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