Pell Grant Shortfall: Will Needy Students Lose Out? - Higher Education

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Pell Grant Shortfall: Will Needy Students Lose Out?

by Black Issues

Pell Grant Shortfall: Will Needy Students Lose Out?

A bipartisan plan to raise the maximum Pell Grant for needy students is facing a major roadblock just as more students are seeking this need-based financial aid for college.
With much fanfare, educators and lawmakers hailed a recent agreement to raise the top Pell Grant by $250 next year, to $4,000. With the increase, needy students would get more funds to meet increasing tuition costs, advocates said.
But that agreement is now in serious jeopardy because of surging student demand for these grants, and the nation’s ailing economy bears much of the blame.
“When Americans lose jobs due to an economic downturn, they invest in their futures by going back to college to improve their skills and employability,” says Dr. David Ward,  president of the American Council on Education. “This is good for our nation, but it puts a strain on the Pell Grant program at a time when the federal budget is also under pressure.”
Put simply, Congress doesn’t have the money to raise the top grant by $250. Lawmakers thought they had found enough new funds — an extra $1.7 billion — for the increase. But now the Bush administration says that $1.7 billion is enough only to meet current obligations, which include a 10 percent increase in the number of students eligible for Pell Grants this year. Ward terms such an increase “unprecedented” in the program.
As a result, the program has a shortfall — committing funds to students above and beyond its current budget. To add a grant increase and cover the shortfall, Congress needs to find an extra $1 billion.
“The economy has created an enrollment boom,” says J. Noah Brown, federal relations director for the Association of Community College Trustees. Most analysts realized there would be some shortfall in the program. “But the size of this is somewhat surprising,” he says. “We didn’t know it would be this large.”
Pell is unique among federal student aid programs in that it operates somewhat like an entitlement program such as Social Security. “If a student qualifies for dollars, he or she gets it,” Brown says. But funds are not unlimited, and a sudden surge in demand creates a shortfall that Congress must cover, usually after the fact.
Earlier this year, higher education organizations, including those representing Black colleges, endorsed a $600 increase in the maximum Pell Grant. The Bush administration recommended just a $100 increase, and Congress seemed to seek a middle ground with an increase of $250.
Finding the extra $1 billion may be difficult. The House and Senate already have approved funding levels for Pell, and any additional money may have to come out of other programs.
The good news, some analysts say, is that more low-income, first-generation students are going to college. Some of the increase may be because of the declining economy, but some believe that early college awareness programs also are having an effect.
“Recent federal investments in student aid, K-12 reform and early intervention initiatives are paying off,” Ward says.
“Millions of low-income students have been promised that if they work hard and stay in school, the federal government will help them go to college,” Ward says. “Now the federal government must keep its part by fixing the Pell shortfall and maintaining the $4,000 grant provided in both versions of the (2002 education) bill.” 

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