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Threats to Pell Grants Materialize in the House

Oct 07, 2011

By Vickie Choitz and Elizabeth Kenefick

A draft appropriations bill released by the U.S. House Appropriations Committee on Sept. 29 significantly harms Pell Grant students by slashing $44 billion from the program over 10 years, putting in jeopardy the maximum Pell Grant, and making drastic changes to eligibility. These proposed changes threaten low-income students' ability to access and succeed in higher education.

The House Labor, Health and Human Services Fiscal Year 2012 appropriations bill significantly cuts Pell Grant funding in two ways. It directs the Secretary of Education to reduce the maximum Pell Grant if more students qualify for grants than Congress funded based on projections the previous year. The bill also rolls back several recent eligibility expansions and introduces new limits in the program.

These changes come on the heels of the Budget Control Act of 2011 passed in August. The measure included $17 billion to cover most of the projected Pell shortfall for the next two years. The Pell program still faces a projected $1.3 billion shortfall in FY 2012. The Senate Appropriations Committee approved a bill on September 21 that would fund the shortfall without reducing the maximum Pell Grant or making harmful changes to student eligibility. The House appropriators, in stark contrast, not only fail to fund the shortfall, they also propose deep and harmful cuts.

More than half of the cuts are from extreme eligibility changes and are mostly at the expense of low-income students working to support themselves and their families. The biggest cut is a major rollback of the Income Protection Allowance (IPA) levels - the amount of money families can keep to cover basic living expenses before being expected to pay for college costs. Increased IPA levels passed with bipartisan support in Congress in 2007 and substantial support from numerous higher education and student groups.  A primary justification for the changes in 2007 was to increase aid to more students in need, which makes the cuts in the House bill particularly puzzling given the recent growth in the number of needy students. In the face of Pell Grant reductions, affected students likely will be forced to work more hours to replace lost aid or to take fewer courses, substantially reducing their chances of academic success.

About 25 percent of the cuts are from changing the definition of "income" in the needs analysis formula to include selected benefit programs for low-income families, including the Earned Income Tax Credit. This, too, is a rollback of 2007 bipartisan changes, and it results in significant grant reductions for many low-income students. Other cuts include eliminating eligibility for less-than-half-time students; ending an option called Ability to Benefit that allows students without a high school diploma or equivalent to receive aid after showing they can succeed in college; reducing the income level for a student to qualify for an automatic Expected Family Contribution of zero from the currently scheduled $32,000 to just $15,000; and retroactively limiting the number of years a student can receive Pell Grants to six years (which would mean that a Pell student who is one semester away from graduating, but who has used up all eligibility, would not get a Pell grant for her last semester). Brief analyses of the harmful effects of most of these cuts and a summary factsheet can be found on CLASP's Save Pell page.

These changes are perverse, undermining low-income working students as they strive to further their education and gain valuable skills necessary for higher-skilled jobs. With 14 million Americans unemployed and even more lacking the credentials they need to compete economically, it is unfair and unwise to erect more barriers to their success.

See related article: House Appropriators Propose Technical Changes, Setting the Stage for Drastic Cuts to Workforce Programs >>

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