Pell Grant Confusion: Sacred Cow Or Sequester Road Kill?
NEW YORK ( MainStreet) Pell grants emerged from the 1973 re-authorization of the Higher Education Act and were eventually named for Senator Claiborne Pell, a Rhode Island Democrat. They became a bedrock of the nation's efforts to provide college access to students from low-income families. 1980 was the only year that Pell funding was cut, when the maximum annual award was reduced by $50.
One of the benefits of the 2010 Health Care and Education Reconciliation Act was that the Department of Education no longer guaranteed student loans that were made by banks and other private lenders. Money saved by ending the private lender subsidy was used to bolster the Pell grant program.
According to studentaid.ed.gov, the 2011 Budget Control Act, which launched the 2013 sequester last March, exempts Pell grants from the sequester's spending cuts. The max grant for 2012-13 was $5,550; for 2013-14 it's $5,645.
But the fate of Pell is unclear in the out years of the current decade because of budgetary questions and the sequester, which will be around until 2021. In September, the Congressional Budget Office issued a report that explores alternatives to Pell grants as they exist, which suggests that Pell is no longer a gimme.
Neither Jane Glickman nor Steve Specter, spokespersons for the Department of Education, could be reached for comment.
"The Budget Control Act of 2011 sheltered Pell this year by specifying the funding for fiscal years 2012 and 2013," said Mark Kantrowitz, founder of Finaid.org and publisher of Edvisors, a network of Websites providing intelligence on student loans. The amount of funding for each Pell grant award covers two years. "So theoretically there will be an issue for fiscal year 2014," he added. The federal government's fiscal year ends on September 30.
"I think that probably Pell wasn't affected this year because the first of the two fiscal years for an award year controls funding for that year," said Kantrowitz. "So it is possible sequestration will cut Pell in 2014-15.
Kantrowitz cited the Department of Education as evidence. "Note that the Department's page on the topic, says Pell is exempt, but only talks about the two years for which it is definitely exempt."
If the decision to fund Pell depends on Congress, the future is indeed up for grabs. Jeff Baker, director of policy liaison at the Information for Financial Aid Professionals (IFAP), wrote in an October 17 message on the IFAP Website that while Pell grants were good to go this year, "information about 2014-2015 award year Pell Grant payment amounts will not be available until a bill providing an appropriation for the program is enacted."
Federal legislators that are looking for a way around the sequester are in a minority and have few solutions at their disposal. Former "Saturday Night Live" comedian Senator Al Franken (D-Minn.) was playing the straight man when he said that he'll push to shut the sequester down because of the damage being done to students and colleges.