Republicans Push Pell Changes

House's proposed budget for 2012 would keep maximum Pell Grant at $5,550, but change rules so fewer students are eligible. Bill would boost funds for NIH.
September 30, 2011

WASHINGTON -- House Republicans released a proposed budget for the 2012 fiscal year on Thursday that would preserve the maximum Pell Grant at $5,550 but change the program’s eligibility criteria, make deep cuts to colleges that serve minorities, and block enforcement of some of the Education Department’s controversial program integrity rules. One would-be beneficiary of the legislation: The National Institutes of Health, which would see its budget rise by 3.3 percent.

The proposed budget, posted Thursday on the website of the Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, falls somewhere between the extremes of the past year. The cuts are less deep than House Republicans proposed in February, but the recommended changes to Pell Grants surprised many of the program's supporters, who believed that the deal on raising the federal debt limit had sheltered the grants for the upcoming fiscal year.

Among the biggest impacts the budget plan would have on the Pell Grant program: Students who attend college less than half-time would no longer be able to receive the grants. The grants could be used for only 12 semesters, not 18. Students who are eligible for less than 10 percent of the maximum grant would receive nothing. The bill would also change income protection allowances and lower the income level that results in an expected family contribution of zero.

Over all, the changes would cut $2.3 billion from the Pell Grant program in 2012.

Unlike the Senate’s proposed budget, approved by its Appropriations Committee last week, the House version would continue subsidizing student loan interest payments during the six-month period between when borrowers leave school and when they must start paying back the loans. The Senate committee had eliminated that benefit, using the savings to keep the Pell Grant at its current maximum without any eligibility changes.

Higher education associations said they were still calculating how many students would be affected by the eligibility changes. The proposal drew some cautious praise, at least as an improvement on the broader Pell Grant cuts that Republicans proposed in February.

“This shows a more thoughtful attempt to constrain costs without drastically overhauling, cutting or changing the purpose of the Pell Grant Program,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators.

Still, he said the House Republicans’ approach raised concerns, including that the eligibility changes were being debated as part of a budget bill rather than as standalone legislation.

The eligibility changes would hit particularly hard at community colleges, where many students take longer to graduate (especially if they transfer to pursue bachelor's degrees) and where many are enrolled less than half-time. “It’s really a body blow, at least as proposed,” said David Baime, senior vice president of government relations and research of the American Association of Community Colleges. The change was especially puzzling in light of the debt ceiling deal, which set aside most of the funding for Pell Grants for 2012, he said.

Many other programs would be eliminated or face deep cuts, especially grants for minority-serving institutions. Programs for colleges that serve significant numbers of black students (but are not historically black), Asian-Americans and Pacific Islanders, Alaskan Natives and Native Hawaiians, and Native Americans would be wiped out, as would federal money for tribal colleges. The budget for Hispanic-serving institutions would be cut 83 percent; historically black colleges and universities would face a 36 percent cut.

The budget would also cut all national and community service programs, including AmeriCorps, and programs in international and foreign language education.

And it would block implementation of two of the Education Department's most controversial "program integrity" rules -- the state authorization rule and the data collection for the "gainful employment" provision.

Other financial aid programs emerged from the budget unscathed: the Supplemental Educational Opportunity Grant and federal work-study would receive the same amount they are getting in 2011. “We are grateful that the committee found enough funding to preserve SEOG and federal work-study, even though it is level funding,” said Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities. “SEOG in particular totally focuses on the neediest of families.”

The National Institutes of Health would also get a bump of $1 billion, reversing a Senate-approved cut of 1.8 percent and representing a major change from the 5 percent cut that House Republicans wanted in February.

Whether any of the cuts will become law is unclear. The bill was released in an unusual manner -- it was posted on the subcommittee’s website without a markup or hearing, and it’s uncertain whether one will take place. The Senate has already passed its own appropriations bill, and the budget is likely to be passed as one omnibus piece of legislation rather than with individual bills for segments of the government.

The bill was a useful starting point to show how the subcommittee chairman, Rep. Denny Rehberg, would approach the budget in discussions with the Senate, said Terry Hartle, senior vice president for government and public affairs at the American Council on Education. But he said he anticipated pushback from higher education groups on both the Pell Grant provisions and the cuts to minority-serving institutions.

“This is very interesting, it’s important, and we’re going to look at it very, very carefully,” Hartle said. “But we are not going to overreact to what is clearly intended as a marker and not something that’s going to be voted on right away by the House.”

Perhaps the biggest question is what the Pell Grant Program will look like -- and how it will be paid for. Unlike the Senate version, which would be a short-term solution relying on cutting interest subsidies, the House budget would constrain Pell Grant costs in the long term, said Jason Delisle, director of the Federal Education Budget Project at the New America Foundation.

“The House is going to be able to make the case that what they have done permanently lowers the cost of the program for every year,” Delisle said. “What the Senate has done is kept the program at its current costs, but cannibalized another higher education program to fund it for a year.”

Eventually, Congress will probably use both eligibility changes and the cuts to interest subsidies to pay for the program, he said, even if it only uses one of those methods for the upcoming fiscal year. In the short term, decisions may rely on which change is likely to go unnoticed by students and families: While reducing the maximum Pell Grant would be an immediate effect, both eligibility changes and the elimination of some loan subsidies are less obvious.

“You add up all the numbers, and you look at where we’re headed,” Delisle said. “They’re going to have to do all of it.”


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