Experts Call for Higher Education Community to Unite With a Plan to Sustain Pell

Despite some technical disagreements, higher education experts at an Education Sector panel discussion Wednesday agreed that the higher education community needs to form a singular, unified issue campaign to put the Pell Grant program on sustainable long-term footing.

The panel discussion, titled "Is the Pell Grant Program Sustainable?," focused on the immediate issue of student aid funding in the Obama Administration and GOP fiscal year (FY) 2013 budget proposals, but also on the broader issue of providing opportunity for low-income students and finding a long-term solution to preserve Pell and other student financial aid programs.

Congress has a history, particularly recently, of taking emergency actions during contentious budget battles to try to maintain Pell funding. In the FY 2012 budget, Congress plugged the $1.3 billion award year 2012-13 Pell Grant shortfall by eliminating the temporary undergraduate Stafford loan interest subsidy during the grace period and limiting Pell Grant eligibility requirements. Savings from the Budget Control Act of 2011 allow Congress to cover program costs in FY 2013.  Yet, in FY 2014, the Pell Grant program is expected to reach a $7.5 billion shortfall.

The current Obama Administration and GOP FY 2013 budget proposals provide two different scenarios for funding the student aid programs. Jason Delisle, director of the Federal Education Budget Project at the New America Foundation, called the Obama budget proposal "vague" and a "one-year fix" that doesn’t attempt to address the FY 2014 Pell Grant funding shortfall. President Obama's budget proposal includes a maximum Pell Grant award of $5,635 for the 2013-14 award year, a one-year extension of the 3.4 percent interest rate on Subsidized Stafford Loans and a permanent extension of the American Opportunity Tax Credit.

Unlike the Obama plan, Delisle said the GOP plan puts the Pell Grant on a long-term sustainable path. Drafted by House Budget Committee Chairman Paul Ryan (R-WI), the House-passed GOP would hold the maximum Pell at $5,550 by eliminating the annual automatic inflation-adjusted increases, and eliminate auto-zero eligibility and Pell Grant eligibility for less-than-half-time students.  It would also limit grant eligibility based on an undefined income cap, which Delisle said could lower the cost of providing a $5,550 maximum Pell by about $2.5 billion per year.

"The proposal ends the in-school interest-free benefit on Subsidized Stafford loans for undergraduates," he said. "We believe then that the Ryan budget has to move those savings from that proposal to pay for Pell."

Counter to Delisle’s argument about the Ryan budget providing a sustainable path for Pell, Education Trust Vice President for Policy Jose Cruz noted that even if the Ryan plan balances the Pell budget, it still fails to address the needs of low-income students.

"The value of the Pell Grant in terms of how much it contributes to the total cost of attendance has been decimated throughout time," Cruz said. "If you keep it flat, is it sustainable for students? It’s not." 

Audience member and Executive Director of the Committee for Education Funding, Joel Packer, also disputed Delisle’s assessment of the Ryan budget, arguing the plan would not sustain the maximum Pell Grant at $5,550, or even $4,860 for that matter.

"The Ryan budget eliminates all mandatory funding for the Pell Grant program," Packer said. "It would devastate Pell Grants and all other student aid."

The Congressional Budget Office (CBO) projects total mandatory Pell funding between FY 2013-FY 2022 at $105.8 billion, with $89.5 billion coming from the automatic add-on above the discretionary appropriated maximum as mandated in the Student Aid and Fiscal Responsibility Act (SAFRA). (The remaining specific mandatory funds come from the Budget Control Act and the FY 2011 and FY 2012 appropriations bills.) According to Packer, the Ryan budget does not shift these funds to discretionary because there is no corresponding increase in discretionary funds to account for them.

The GOP plan, however, which differs greatly from President Obama’s FY 2013 budget request, will not move forward as it stands no chance of passage in the Democratically-controlled Senate.

Without a concrete plan to address the future of Pell Grant funding, panelists agreed that the discussion needs to continue and the higher education community needs to work together to lead that discussion rather than reacting to the annual Congressional budget battle.

"There have been a lot of bad choices in Congress that have led to this dilemma," former Department of Education researcher Jon Oberg said. "The discussions going on now are about what kind of programs we are going to kill off to support Pell."

Vice President for Government Relations at the National Association of Independent Colleges and Universities, Sarah Flanagan, said the higher education community has grown and changed, and often finds itself engaged in multiple issue campaigns.

"I think we have more groups than ever," she said. "I would encourage the advocates to come up with a clear message to the public."