Magazine article University Business

Kinder, Gentler Pell Cuts: Proposals for Reducing Costs While Avoiding Across-the-Board Cuts

Magazine article University Business

Kinder, Gentler Pell Cuts: Proposals for Reducing Costs While Avoiding Across-the-Board Cuts

Article excerpt

REPUBLICANS AND DEMocrats agree: The projected cost of the Pell Grant program is unsustainable. Now policymakers are looking at the best ways to reduce costs.

In its 2012 budget proposal, the Obama administration proposed eliminating the year-round Pell Grant program and student loan subsidies for graduate and professional students to help offset what the administration estimates will be a $20 billion funding shortfall for the 2012-13 award year. The proposal to eliminate the year-round Pell Grant program was fast-tracked when Congress included this provision in the FY2011 spending bill. As a result, students will not be able to receive a second Pell Grant award in the 2011-12 award year.

Unfortunately, the elimination of year-round Pell appears to be just the start. In their FY2012 budget outline, House Republicans have proposed rolling back 2012-13 Pell Grants to FY2008 levels. According to a Congressional Budget Office estimate, this would reduce the current maximum Pell Grant of $5,550 to $3,040 for the 2012-13 award year. While it is unlikely this budget outline will be adopted by Congress, it demonstrates Republicans' desire to dramatically cut Pell program costs.

ALTERNATIVE PROPOSALS FOR COST CUTTING

As the prospect of additional Pell Grant program cuts in the FY2012 budget grows, leading student aid policy experts have taken the initiative to propose strategic ways to reduce funding instead of simply slashing awards across the board. In a recent student aid policy analysis, Mark Kantrowitz, the publisher of Fastweb.com and FinAid.org, lays out 14 options to reduce the cost of the Pell program that would be "less harmful" than cutting the maximum award as House Republicans have proposed.

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In addition, a group of seven prominent economists who focus on higher education research offered five options to cut costs in the "least destructive manner." These economists include:

* Sandy Baum of the School of Education and Human Development at The George Washington University (D.C.)

* Susan Dynarski of the Ford School of Public Policy and School of Education at the University of Michigan

* Art Hauptman, a higher education consultant and contractor

* Bridget Terry Long of the Harvard Graduate School of Education

* Mike McPherson of the Spencer Foundation

* Judith Scott-Clayton of the Teachers College at Columbia University

* Sarah Turner of the Curry School of Education at the University of Virginia.

The economists outlined the goals of their options in a letter to the College Board. The letter states that modifications or cuts to the Pell program should be made with a clear eye to facilitating access for students who are prepared to succeed in college and to encouraging students to complete their postsecondary studies in a timely fashion, without sacrificing the targeting of funds to the students who need them the most.

The options outlined by Kantrowitz and the group of economists share several similarities.

LIMITING SEMESTERS OF ELIGIBILITY

Both proposals suggest reducing the time that students can be eligible to receive Pell Grants.

Currently, students can get Pell Grants for 18 semesters--roughly eight years of college. The policy experts suggest reducing this to six years. The letter to the College Board notes that only 3 percent of Pell recipients receive a grant after six years. Reducing eligibility to six years (12 semesters) would save about $800 million and would also encourage students to complete their degree sooner. …

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