Proposed federal budgets to affect Pell grant funding
The Obama administration proposed a budget plan that includes cuts of about $20 million from Pell grant federal funding.
Since the president released his budget proposal on Monday, Republicans in the House have been debating a proposal of their own to submit in response.
The administration’s budget for the 2012 fiscal year proposes $36.1 billion in Pell grant funding for approximately 9.6 million students but would include a provision preventing students from collecting more than one annual Pell grant. Currently, students may earn a second Pell grant for summer classes.
The maximum grant allocation of $5500 would not be decreased.
In contrast, the Republican plan would reduce the maximum Pell grant amount available for both the regular academic year and summer term.
The Republicans’ propose a reduction in the maximum grant amount possible for students from $5,500 to $4,700, a decrease of 14.5 percent.
According to Steven Smith, the Kate M. Gregg Distinguished Professor of Social Sciences at the Washington University, the Republican-proposed cut will be a blow to financial aid across the board.
“For students at a place like Wash. U., that’s a big chunk,” Smith said. “That’s a pretty big hit, and to have it all done in one year; that’s something to which a student has a hard time adjusting, because that means that whenever you get the Pell grant, whether it is for the regular academic year or the summer, there is just less money available for you.”
According to the Obama administration, the cuts suggested by the Republicans will save money with little effect on graduation rate.
Obama’s plan, Smith said, might be more generous to students than the Republican alternative.
But according to Smith, Obama’s plan would take a large toll on students receiving the maximum grant. It would also affect those students in the upper income range eligible for the grant, who will likely receive less federal aid, if any, under the new budget.
“They used to be able to get that maximum plus an additional amount for the summer; now that additional amount for the summer will disappear,” Smith said. “That will mean less money in the pockets of some students.”
In the past, Pell grants have been extended to students for summer terms so that they can graduate earlier. But after evaluating graduation rates, the Office of Management and Budget and the Department of Education found that students who receive summer Pell grants typically do not graduate early.
This is because many of the students who have received summer Pell grants are also working part time, research conducted by the federal government found. Taking courses in the summer allows these students to take fewer courses and work more hours year-round.
“The bigger picture here is that funding for student aid is at risk when both Democrats and Republicans are looking for ways to trim budgets,” Smith said. “I think there’s little doubt that there is going to be somewhat of a hit on Pell Grants for the next fiscal year.”
The effects of the cuts will extend to both the private and public sectors of higher education.
“In the sector of public colleges and universities, we’re going to be seeing rising tuitions and fewer financial aid dollars available,” Smith said. “So, inevitably, there are going to be people who don’t go to college, or delay going to college, or go at a slower pace in order to make it affordable in the new situation. It’s inevitable that that affects working class students from working class families.”
The University will by no means be immune to the effects of the cuts.
“It will affect places like Wash. U. because students will shift from here to a less expensive school, unless the University is able to make it up,” Smith said. “Wash. U. and other schools like it have done pretty well. They’ve worked pretty hard to make it up with internal financial aid dollars. But this is going to be a big system-wide hit, and it will be increasingly difficult for colleges and universities to make it up.”
Student Financial Services at the University plans to compensate students for the cuts in Pell grants.
“If Pell grants for the academic year are reduced, the University will make up the difference according to a policy that has been in place for some time,” Bill Witbrodt, director of Student Financial Services, wrote in an e-mail to Student Life. “If a student’s family’s financial situation stays about the same, and cost (tuition, etc.) increases, then the student’s financial aid award should increase also.”
There are certain benefits embedded in Obama’s proposed budget, including a 13 percent increase in research funding to places like the National Science Foundation.
Obama’s budget would also allocate $8.5 billion in new loan volume to the Federal Perkins Loan Program each year, which reaches approximately three million students. To increase competition among colleges, the plan also proposes $175 million in competitive grants.