Congress Looking for Ways to Solve Pell Grant Shortfall

Congress may find a way out of the Pell Grant shortfall yet, based on recent action in the House of Representatives. A declining economy has sent more young adults back to school and created a $1.3 billion shortfall in the nation's primary student aid grant program. After several false starts, Republican leaders have succeeded in allocating $1 billion toward the shortfall in an emergency spending bill used primarily to fund homeland security and the military campaign in Afghanistan.
"If Congress fails to act now, millions of low- and middle-income students could see their badly needed Pell Grants reduced or even eliminated," said William Hansen, deputy secretary of education, before a Senate panel in mid-May.
Until the recent House action, however, every plan to address the shortfall had been a non-starter on Capitol Hill. The Bush administration originally proposed funding the Pell shortfall by cutting lawmakers' pork-barrel education projects, which drew the wrath of both parties. Then it suggested a delay in some student-friendly loan regulations that prompted an outcry from consumer groups.
Where earlier options failed, the next-best solution may be the emergency spending bill, since the Congress must approve this measure to support on-going defense operations. While the $1 billion for Pell will not cover the entire shortfall, the provision — if approved in both houses — will reduce the possibility that the government would cut grant amounts or awards due to the funding shortage.
"It stabilizes the Pell Grant program so that increases in funding for 2003 can be used to give students more grant aid next year," says Dr. David Ward, president of the American Council on Education and co-president of the Student Aid Alliance, a coalition of 60 groups representing educators and students.
Several factors have contributed to the shortfall in the nation's largest student aid grant program. College lobbyists successfully convinced Congress to raise the maximum grant from $3,750 to $4,000 this year, but there is not enough money to pay for the increase. The economic downturn of the past year has sent more young adults back to college, and demand for grants is up significantly. As a result, Pell allotments approved by Congress last year have not kept pace with student need. Shortfalls may continue next fall as well if low-income youth decide to pursue education rather than jobs in the current economic climate.