Write the Check: Pell Dollars for Pell Students

Congress is faced with a unique opportunity — an opportunity to make college more affordable for millions of college students by re-investing in Pell Grants.

How is this possible given tight budget constraints?

In short, as the economy improved, college enrollments declined, bringing the cost of the Pell Grant program down, too. The estimated budget costs of the Pell program have declined 21 percent since its peak in 2010, and the program now has a $7.8 billion surplus. This means that dedicated Pell money is now available to use to strengthen the Pell program.

So, where should this available Pell funding go? Here are a few options (many that were enacted on a bipartisan basis in 2007 and 2008):

• Reinstate year-round Pell. Year-round Pell has bipartisan support in both the House and Senate. Initially proposed by President George W. Bush, it was enacted into the 2008 Higher Education Opportunity Act, allowing students attending at least part-time to receive year-round Pell (estimated additional annual cost of $2.1 billion). This provision was eliminated a few years later to reduce the cost of the Pell program. In the fiscal year 2017 budget, the president has proposed restoring year-round Pell for full-time (but not part-time) students, which would increase annual discretionary Pell costs by about $1.4 billion.
• Change the Expected Family Contribution for maximum Pell. In the 2007 College Cost Reduction and Access Act, Congress increased the amount of income by which a student qualifies for maximum Pell from $24,000 to $30,000. This provision was eliminated in 2012 to reduce Pell spending. Restoring this student financial aid provision would make college more affordable for millions of students and increase Pell costs by $1 billion.
• Increase the maximum Pell award. The Appropriations Committee funds the base $4,860 maximum Pell award, with additional amounts established in statute for a maximum Pell award of $5,775. Absent any Congressional action, the maximum award will not adjust with inflation after 2017. But the Appropriations Committee has the option to increase the base award. Increasing the maximum Pell award will help low-income students cover more costs and compensate for Pell’s decreased buying power. The general rule of thumb is that a $100 increase in Pell would increase Pell budget costs by $500 million.  So providing a $140 increase to the base Pell award (which would bring the base award to $5000) along with an additional $1,055 automatically provided by statute would cost about $700 million annually.

So a $7.8 billion surplus creates a really unique opportunity: Congress can restore the bipartisan student eligibility provisions as well as increase the maximum Pell Grant award. All of these options can be implemented this year, without any additional funding demands on the check-writing Appropriations Committee.

The Pell dollars are there; let’s hope they remain for Pell students.