Pell Grants safe from 2012 budget cuts

President Barack Obama’s proposed FY 2012 budget proposes more funding for college Pell Grants, but changes to the way the program doles out aid could mean individual college students will see less money.

Obama’s proposed budget lays out $36.1 billion in Pell Grant funding for about 9.6 million students during the 2012-2013 award year, but the budget request includes a provision that would prevent students from receiving more than one Pell award per year.

The Pell Grant Protection Act would stop some students from receiving two Pell Grants in a single award year and would eliminate in-school interest subsidies on loans of graduate and professional students, which the government now pays on certain student loans borrowers have while enrolled in college.

Secretary of Education Arne Duncan said his department is facing a $20 billion shortfall for Pell Grants – federal awards offered to the neediest undergraduate students – and the limit on awards and cut to interest subsidies for graduates could help stabilize the program.

Duncan also said the country has seen a historic increase in demand for financial aid, and his department has to become more efficient in its use of funds.

“These are absolutely painful cuts, but they are the type of responsible decisions that are necessary so that students can pay for college,” Duncan said.

He said the Pell Grant program was originally estimated to cost a couple hundred million dollars each year, but by allowing students to obtain two grants a year, the program became financially unsustainable.

“For us, in tough budget times, it’s a much bigger priority to maintain students getting the maximum Pell Grants, $5,500, and to do that for everybody rather than having a smaller number of students get $11,000 per year,” Duncan said.

About 11 to 12 percent of GW undergraduates receive Pell awards as part of their financial aid packages. Students are awarded Pell Grants based on the cost of attending their school, financial need and status as a full or part-time student.

Associate Vice President for Financial Assistance Dan Small said GW will monitor the government’s proposal and determine its effects on the student population.

“It is too early in the process to comment on GW’s course of action if the in-school subsidy for graduate students and/or reduction in Pell Grant funding would result in increasing our aid allocation,” Small said in an e-mail.

He said there are more than 1,390 students who received Pell Grants at GW this year, but since the ability of students to have two Pell awards in a year just started, less than five students have taken advantage of it.

Small said he did not know how many students will attempt to use Pell awards for this year’s summer term.

“Besides the president’s proposal, the House [of Representatives] has come forward with their proposal to reduce federal aid expenditures. We are reviewing each proposal knowing that it will more than likely change many times over the next several weeks/months,” Small said in an e-mail.

A combination of new programs and other cuts were also proposed in the budget that may affect college students.

The budget supports expanding the Federal Perkins Loan Program to provide $8.5 billion in new loan volume each year, estimated to reach about three million students.

Another $175 million in competitive grants was proposed to boost college completion.

The budget will now undergo scrutiny in Congress, where Republicans are expected to challenge Obama’s proposals.

“We want to continue to work with everybody, including House Republicans, on ways to cut spending and cut the deficit," Duncan said.

Duncan said to “win the future” – a rallying cry in Obama’s State of the Union Address – the U.S. has to continue to out-educate and out-innovate competitors in other countries.

“We have to make sure we’re putting our children and our country in a place to be more successful in the future, and cuts that take us in the wrong direction don’t help us get there,” Duncan said.

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