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Maximum Pell Safe For Now

April 13, 2011

As details emerged early Tuesday morning about the last-minute spending compromise that averted a government shutdown, higher education experts shared one reaction: It could have been worse.

The deal funds the federal government for the rest of the 2011 fiscal year, cutting $38.5 billion from current spending levels. The compromise, which has yet to be approved by Congress but appears likely to pass, would end year-round Pell Grants that aimed to help students complete college faster and would shave $20 million each from TRIO and GEAR UP, two federal programs that prepare low-income students for college, as well as cut $260 million from the National Institutes of Health.

House Republicans had wanted to cut even more: H.R. 1, their spending proposal for the remainder of the 2011 fiscal year, would have slashed the budgets for Pell Grants and scientific research as part of $61 billion in cuts. In the final compromise, the maximum Pell Grant amount stayed at $5,550, a priority for President Obama, and deep cuts to health and energy research were largely averted.

“Given the deep and truly harmful cuts that were contained in the House bill, they came out at a reasonable place,” said Barry Toiv, vice president for public affairs at the Association of American Universities. “It’s clear they decided that while it’s important to cut spending, it has to be done in a smart way.”

More battles lie ahead. Friday is the official, if rarely observed, deadline for Congress to pass a budget resolution for the 2012 fiscal year. Rep. Paul Ryan, a Wisconsin Republican and the chairman of the House Budget Committee, recently proposed a spending plan that would cut money for job-training programs and research and reduce Pell Grants to “pre-stimulus levels.” Obama will present his own plan for long-term deficit reduction -- his 2012 budget proposal in February was widely perceived as not cutting enough -- to the nation today. And Republicans have pledged that a vote to increase the debt ceiling (the amount the federal government can borrow) will pass only if more spending cuts come with it.

“Basically, there are two opening hands in the card game,” said Becky Timmons, assistant vice president for government relations at the American Council on Education, referring to the Republican proposal and to Obama's upcoming speech. “And the stakes are really high.”

As a shutdown loomed and the fight over the 2011 budget continued, keeping the maximum Pell Grant at $5,550 was a top priority for higher education lobbyists. The loss of the “second Pell,” which allowed students to pay for summer classes, came to be seen as a sacrifice necessary to pay for the vast grant program, and even Obama proposed ending the summer grant in his 2012 budget.

Pell Grants for summer study have been available only since the 2009-10 academic year, and little information is available so far on their effectiveness. Among administrators, they were viewed as an add-on, rather than a necessity.

“We’re happy to see that the Pell Grant maximum was maintained,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators. “That has become the cornerstone program for low-income students.”

The second grant will cease to exist for the 2011-12 school year, but the continuing resolution would allow institutions to award grants for summer 2011 out of funds from the 2010-11 school year, Draeger said, a move he called “a big win for students.”

Other higher education programs and benefits also emerged relatively unscathed. Subsidized student loan interest for graduate students, which Obama has proposed eliminating in the 2012 budget, is unmentioned in the 2011 resolution and so will remain in effect, Draeger said. Spending on the National Institutes of Health was reduced by $260 million, rather than the $1.4 billion House Republicans wanted to cut, and money for energy-efficiency research was preserved.

“We were pleased that the president clearly made these areas a priority,” Toiv said. “He was fairly vocal about it all along. We also feel that we have some strong allies on both sides of the aisle in Congress.”

Concern now shifts to what will happen next. How much Ryan’s plan for 2012 would cut from Pell Grants is unclear, but the amount of available money from 2008 spread across current demand would more than halve the maximum available grant, bringing it to just over $2,000, Draeger said.

Just as the Ryan plan dealt more in broad principles than in specific figures, Obama’s plan will probably lay out a broad blueprint, Timmons said. “The president will probably talk about the need to cut and invest,” she said. “That’s a theme he’s struck before. His investments include things like federal student aid and research that will build the economy of the future.”

The fate of many programs, especially smaller ones, might not be known until much further along in the 2012 negotiations, as lawmakers and the administration trade priorities and make compromises.

“When these budget agreements go to the final hour, you start to get into some horse trading,” Draeger said. “It’s always a fear of what’s going to be included or not included in these spending cuts. It’s almost like you’re chasing specters of cuts around Capitol Hill.”

 

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