Pell Grants Face Cuts in Congress

pell grant cutIn February 2011, the U.S. House of Representatives passed an appropriations bill that would cut the Federal Pell Grant Program, beginning in July 2011. The bill is now being debated in the Senate as anxious students await the outcome for the college funding program.

The Federal Pell Grant, formerly named the Basic Educational Opportunity Grant, was first issued in 1973 to allow children of low-income families the opportunity to attend college. The money does not need to be repaid.

To receive the Pell Grant, the student must demonstrate financial need by filling out the FAFSA form which looks at family income and determines the expected contribution of the student's family and its eligibility for financial aid. Currently, families making less than $41,000 a year receive the bulk of Pell Grants. Depending on the cost of the chosen college, the Pell Grant may pay anything from a small portion to most of a student's costs.President Obama, along with many Democrats, appears to be at odds with the Republican Senate over how much should be trimmed from the grant program. Under Obama's plan, the aid amount would remain the same with the exception that there will no longer be a summer aid package. This will only affect students who go to college year-round and would save an estimated $10 billion.

The Republican plan would cut the maximum Pell Grant from $5,500 to $4,500. It also would change eligibility, based on the amount that a student's family is expected to contribute. A total of 1.7 million students would no longer be eligible for the grant and an expected $20 billion would recouped.

Whatever the outcome, the bottom line is that there's just not enough Pell money to go around. The weak economy has meant that more low income students are going to school to make themselves more marketable to employers. To bridge the funding gap, students from low-income families may need to work more part-time jobs while attending college, take out more loans, or possibly forgo a college education. In the meantime, students are waiting to hear about changes that will affect their academic future.

With all of the cuts in student aid lately, including trims to state programs such as Georgia's HOPE Scholarship, one has to ask where students will get a break. In his campaign speeches, Obama promised to simplify the financial aid application process, create an American Opportunity Tax Credit to offset the costs of college, and expand the Pell Grant for low-income students. Not all of these have worked out as he planned.

Prospects for student loans look a little better.

In his 2011 State of the Union Speech (pictured above), Obama asked the U.S. government to tell "1 million students that when they graduate, they will be required to pay only 10% of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college."

The existing Public Service Loan Forgiveness Program has been updated to to meet the goals the president set. In addition to that program, the federal student loan system also has been overhauled and student loans are now issued by the government.

So, while the cuts in student grants certainly put a damper on educational plans, efforts are being made to improve access to education in the long run.
Read Full Story

From Our Partners