Funding for the Federal Pell Grant Program is facing a potential $5.7 billion funding cut, a move that experts say may force millions of students to turn to private lenders to fund their undergraduate educations.
The cuts are due to an unexpected budget shortfall in the program, after more students applied for Pell Grant funding than anticipated. Pell Grants offer aid to the neediest undergraduate students across the country.
If Congress votes to reduce the Pell Grant budget, nearly 9 million students nationwide would face a cut of more than 15 percent in their 2011 maximum award, according to the Committee for Education Funding.
At GW, roughly 11 to 12 percent of undergraduate students receive Pell Grant funding as part of their financial aid package, said Dan Small, assistant vice president for Financial Assistance.
Small said if the Pell Grant funding is cut, the onus to help fund the education of these low-income students will fall on GW, which has already had to increase its financial aid pool by millions of dollars in order to help students weather the financial downturn. If GW could not afford to fund the difference, these students would potentially need to turn to private lenders to finance their education.
“If a student’s family financial situation has not changed, reducing the grant award places more of the burden on the student or institution to make up the difference,” Small said. “This could put additional demands on GW’s aid allocation.”
Over the past two years, GW has increased its aid pool to $150 million, and has placed an increased emphasis on fundraising for financial aid.
The maximum Pell Grant award for the 2010-2011 academic year was $5,550, according to the Federal Student Financial Aid division of the U.S. Department of Education. With the potential budget cuts, the maximum grant could drop to $4,705, and may be cut completely from a student who qualifies for less Pell Grant aid.
The amount granted to each student is based on financial need, costs to attend school, and status as a full-time or part-time student.
Sophomore Steve Li said he considers his Pell Grant to be a “pretty significant” part of his financial aid package, as it covers one-tenth of his overall financial aid allotment. Li said if students lost part or all of their Pell Grants, they would be forced to find another source of aid.
“Since, as you progress through GW, your bill increases because of housing, people have to get more private loans to compensate for the gap,” Li said.