University Business - February 2012 - (Page 13)

FINANCIAL AID Saving Pell How Congress maintained the $5,550 maximum Pell Grant By Haley Chitty HE TIME OF UNPREC edented growth for the federal Pell Grant program couldn’t have come at a worse time for Congress. As lawmakers were looking to cut federal spending to address the growing national deﬁcit, record college enrollments, the economic downturn, and expanded Pell Grant awards and eligibility criteria combined to triple the cost of the program over ﬁve years. During the 2006-07 award year, $12.82 billion in Pell Grant awards was distributed to 5.2 million low-income students. By the 2010-11 award year, those numbers ballooned to $36.5 billion, distributed to roughly 9 million students. Not surprisingly, Congress did not predict the program would expand this rapidly and it began running a funding shortfall. President Obama’s ﬁscal year 2012 budget request estimated that the program would need an additional $20 billion to maintain the $5,550 maximum award for the 2011-12 academic year. To plug the shortfall and maintain the maximum award, Congress passed three separate pieces of legislation in 2011 to reduce the cost of the Pell Grant program and divert funding from other student aid programs to fund Pell Grants. ese bills demonstrated the strong, bipartisan support in Congress to maintain the maximum Pell Grant and were considerably better for student aid recipients than some proposed legislation that threatened to slash funding levels for Pell Grants. 2011 BUDGET e ﬁrst piece of legislation that impacted student aid funding was the FY2011 budget. Congress was unable to ﬁnalize the 2011 budget in 2010, so it passed a series universitybusiness.com T The bill made student loans more expensive for some borrowers. of stop-gap spending measures (known as Continuing Resolutions) to keep the government running until it passed a longterm Continuing Resolution in April 2011. is spending bill cut FY2011 federal spending for non-defense programs by nearly $40 billion, but maintained the maximum Pell Grant. To reduce the cost of Pell Grants, the 2011 budget eliminated the newly created year-round Pell Grant program that enabled certain students to earn two Pell Grant awards in a single award year. e program was created to encourage students to ﬁnish college faster. More than 800,000 students took advantage of this program in 2010. Eliminating the program saved the government roughly $8 billion over two years and helped reduce the projected $20 billion Pell Grant program funding shortfall. e 2011 budget also cut $20 million from the Federal Supplemental Educational Opportunity Grant (FSEOG) program. FSEOG is a form of campusbased federal aid and provides need-based grants to low-income students at roughly 3,800 institutions. Institutions apply each year for FSEOG funds and must contribute 25 percent of the award amounts. In addition, the 2011 budget cut $25 million from the federal TRIO programs—eight programs that serve lowincome individuals, ﬁrst-generation college students, and individuals with disabilities to progress from middle school to postbaccalaureate programs. e GEAR UP program, which is designed to increase the number of low-income students who are prepared to enter and succeed in postsecondary education, was cut by $25 million. e budget also eliminated the Leveraging Education Assistance Program (LEAP), a $63 million program that provided funding to states that must be matched to establish a state grant program assisting students who demonstrate substantial ﬁnancial need. Despite these cuts, student aid advocates were counting their blessings because the ﬁnal 2011 budget passed by Congress was more favorable than a version passed by the House that would have cut Pell Grant awards by as much as $845 and eliminated all funding for the FSEOG program. BUDGET CONTROL ACT When Congress passed legislation to increase the debt ceiling, the bill also included several provisions that provided additional funding for the Pell Grant program and made student loans more expensive for some borrowers. While funding for many programs was cut in the Budget Control Act, Congress provided an additional $10 billion for the Pell Grant program for Haley Chitty is director of communications at the National Association of Student Financial Aid Administrators, www.nasfaa.org. February 2012 13 http://www.nasfaa.org http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - February 2012

University Business - February 2012
Contents
Editor's Note
College Index
Ad Index
Behind the News
Financial Aid
Campus CFO
Education Gateways
5 Things Administrators Must Know About E-commerce Now
There’s an App for That
Internet Technology
End Note

University Business - February 2012