Student Aid Raid Continues, Colleges Say

Lobbyists object to Congressional proposal to use Pell Grant surplus for non-college programs.
November 16, 2005

First it was billions of dollars in savings from the student loan programs that members of Congress hope to redirect toward reducing the deficit and providing aid to communities affected by the Gulf Coast hurricanes. Now, lawmakers drafting a compromise version of a spending bill for federal education, health and labor programs are considering a plan to use hundreds of millions that the House of Representatives had set aside to increase the maximum Pell Grant by $50 to pay for other non-higher education programs.

The Student Aid Alliance, a coalition of college groups that lobbies on financial aid issues, sent a letter urging the senators and representatives on the panel drafting a compromise version of a 2006 appropriations bill for the Departments of Labor, Health and Human Services, and Education not to use the Pell program's surpluses for those purposes.

"Whenever the student aid programs produce savings, Congress takes them to spend on other areas of government, whether deficit reduction, hurricane relief, or other education and health programs," read the letter, which was signed by David Ward, president of the American Council on Education, and David L. Warren, president of the National Association of Independent Colleges and Universities. "Congress must stop the raid on student aid!"

"Stop the raid on student aid" has been a rallying cry in recent weeks for student groups and others concerned about what they fear is becoming an unsettling trend. A $50 billion "budget reconciliation" plan that the House of Representatives is debating would wring nearly $15 billion from the federal student loan programs by reducing subsidies to and increasing fees on lenders and by raising interest rates and other costs to borrowers. The House bill would use those funds to reduce the deficit and help pay for tax cuts.

A competing plan in the Senate would produce about $14 billion in savings from the loan programs, and while it would use about $8 billion of those funds to create two new grant programs for needy students and students in science and technology fields, it too would redirect some of the money for deficit reduction and hurricane relief. College officials and student groups have challenged those plans, and their opposition has contributed to political trouble that the budget reconciliation measure is facing in the House, which postponed a vote on the legislation last week.

The spending bill for education and health programs is one of the largest that Congress must approve each year, and because it contains many key social programs, lawmakers are under pressure just about every year to balance many competing interests, especially in tight budget years like this one.

The budget plan President Bush released in February called for increasing the Pell Grant maximum by $100, to $4,150, and for wiping out a $4.3 billion shortfall that has undermined the spending power of the grants for low-income students. But in its version of the spending bill, the House approved a $50 increase for the Pell maximum, and the version the Senate approved last month called for keeping the the maximum grant at $4,050, although both measures would have provided the funds to eliminate the shortfall.

But as members and staffs of the Senate and House Appropriations Committees have met in recent days to craft a compromise version of their chambers' respective bills, they have eyed the billions in surplus funds produced by the Pell program -- due to "an improved economy, and a resulting drop in the cost estimates for the program," the college groups say in their letter-- for other purposes, the groups charge. "It is our understanding that the additional money in the Pell Grant program could provide a $260 increase in the maximum grant, taking it to $4,310 -- a much needed increase for low-income students pursuing their higher education dreams."

A spokesman for the Senate Appropriations Committee said Tuesday that he was not aware of any plan to use the Pell funds for other purposes.


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