President Bush and some federal lawmakers have proposed additional plans for funding the cash-strapped Pell Grant program in the wake of tighter eligibility requirements set to take effect next school year.
The program, which offers the main form of federal aid for underprivileged students, is running a $4.3 billion budget shortfall. Congress amended the program at the end of 2004 to make it more difficult for borderline-income students to qualify for grants. Supporters of the amendments said they were necessary to avert future cuts to the program and will increase financial aid for lower-income students.
Next year, between 100 and 150 GW students lose up to $100,000 as a result of the changes, University officials said. In December, they said a “rough estimate” showed the cuts would only affect between 35 and 50 students.
The University received $2.6 million in Pell money from about 1,000 recipients in the 2003-04 academic year. The average award was $2,600.
In a speech at Florida Community College last month, Bush pledged to increase Pell Grant funding by 12 percent, or $15 billion, over the next five years. The proposal would raise the maximum amount of Pell Grant aid of $4,050 by $100 per year though 2010.
Critics charge that Bush is short on his plan’s specifics and said he has not identified exactly how he will acquire the money. Among those critics is Rep. George Miller (D-Calif.), the ranking Democrat on the House Education and Workforce Committee. Miller has proposed his own solution to increase Pell funding in the form of legislation co-authored with Rep. Thomas Petri (R-Wis.).
The Petri-Miller legislation would change the way federal student loans are subsidized so that college financial aid offices would have more cash available to pay for Pell Grants. Under the Petri-Miller proposal, known as the Direct Loan program, the government would administer loans itself, as opposed to the current system that relies banks and financial institutions to administer funds.
“We’re letting schools keep the savings from the subsidies that currently go to the banks,” said Jason Delisle, legislative assistant to Petri, who added that the program would operate at no additional cost to taxpayers.
A study conducted by the nonpartisan Congressional Budget Office estimated that Pell Grants could be increased by $12 billion dollars over the next ten years if the Petri-Miller proposal were to pass.
The proposal is expected to meet resistance from the banking and financial service industries, which currently profit from administering federal loans.
“Our student loan program is awash with big subsidies for private banks that are completely unnecessary,” said Petri, vice chairman of the Education and Workforce Committee, in a written statement. “If we stop subsidizing banks and just provide the loans directly from the U.S. Treasury, we could free up billions of dollars to be used for Pell scholarships.”
Delisle noted that individual universities would have to decide whether to enroll in the program; those that do not would not receive any additional Pell funding.
Daniel Small, GW’s director of financial aid, declined to comment on whether GW would consider enrolling in the Direct Loan program were it to become established through law.
“We have to review and evaluate all our options,” Small said.
Neither Bush’s proposal nor the Petri-Miller bill will attempt to reverse the stricter eligibility requirements passed by Congress for 2005-06 Pell Grant recipients that will cause some students at higher income levels to lose their grants. Congress may revise the qualification formula for future academic years if Pell’s funding problems dissipate.
Small said GW will likely be able to compensate students who lose their Pell Grants with GW funds or other aid programs.