Year-Round Pell Returns, Pell Surplus Takes a Hit in Senate Spending Bill

By Stephen Payne, Policy & Federal Relations Staff

On Tuesday, the Senate Labor, Health and Human Services, Education, and Related Agencies ("Labor-H") Appropriations Subcommittee unanimously approved a spending bill for fiscal year (FY) 2017, which impacts award year (AY) 2017-18. The bill now heads to the full appropriations committee for consideration on Thursday, where it is expected to pass.

Of note, the subcommittee revived student eligibility for a second scheduled Pell Grant award in an award year, referred to as “year-round Pell” or “summer Pell.” Year-round Pell, which existed briefly from 2009 to 2011, ended out of concerns for the financial health of the Pell Grant Program and was riddled with implementation challenges for financial aid offices.

NASFAA is working to confirm whether the new iteration of year-round Pell mirrors a bill proposed by Sen. Mazie Hirono (D-HI), the Year-Round Pell Grant Restoration Act, a proposal supported by NASFAA. The Hirono bill removes the clause that required students to be “accelerating” in their coursework to receive a second Pell award, and prohibits the Department of Education (ED) from regulating the assignment of crossover periods, two components of the last version of year-round Pell that resulted in highly-manual, burdensome implications for financial aid offices and blunted some of the positive effects of year-round Pell.

Sen. Lamar Alexander (R-TN), chairman of the Senate education committee and a member of the subcommittee called the news on year-round Pell "most important news in higher education out of the Congress this year." He also cautioned that Congress should keep a close eye on year-round Pell to make sure it’s sustainable moving forward. “We have a reserve. We have the money to do it, and I think we should have it in future years… Let’s keep an eye on year-round Pell to make sure this year-round promise is a good promise year after year after year.”

Federal Work-Study (FWS), Federal Supplemental Educational Opportunity Grants (FSEOG), TRIO, and GEAR UP all received flat funding in the bill, while the discretionary portion of the Pell Grant Program would also remain level. Coupled with the mandatory annual inflation adjustment, the Pell Grant maximum award is projected at $5,935 for AY 2017-18, an increase of $120, which is subject to change based on fluctuations in inflation.

The subcommittee once again prioritized funding for the National Institutes of Health (NIH), which received an additional $2 billion for the second year in a row. Funding for opioid abuse prevention saw the biggest increase in funding, with a nearly $2.5 billion increase over FY 2016 levels.

Because of the two-year budget agreement signed into law in November 2015, top-line spending levels were essentially flat for this fiscal year, so any increases to labor, health, or education programs must come at a cost to other programs.

Enter the Pell Grant Program surplus.

In March, the Congressional Budget Office (CBO) reported the Pell Grant Program was operating with a $7.8 billion surplus, a welcome amount for the Pell program and a tempting pot of money for appropriators looking to provide increases to priority programs and avoid cuts or across-the-board spending level freezes. This year, the Senate bill would pull $1.2 billion from the Pell Grant Program surplus to support other programs.

NASFAA and other higher education associations and higher education advocates have been clear in opposition to the use of Pell Grant Program funds for uses outside of the program itself, particularly in light of the program’s recent funding shortfall.

Several members of Congress also expressed their objection to the use of the Pell surplus. Sen. Tammy Baldwin (D-WI), a member of the subcommittee, noted, “This committee could have avoided moving an additional $1.2 billion out of the Pell Grant Program to fund other parts of the bill if we weren’t working on such a tight budget.”

Reps. Bobby Scott (D-VA) and Ruben Hinojosa (D-TX), top Democrats on the House education committee released a joint statement, saying, “A $1.2 billion cut to Pell Grants out of a $7.8 billion surplus – without an increase to the maximum award – is too steep of a price to pay for the restoration of year-round eligibility.”

The full Senate Appropriations Committee will review the bill on Thursday before potentially heading to the Senate floor for consideration in the coming weeks. The House of Representatives is on track to produce a Labor-H bill before the Independence Day recess. The next steps from there are hard to pinpoint. Most observers expect the process to eventually grind to a halt with a continuing resolution (CR) bridging the gap until after the November elections, where the victorious party will have more clout in negotiations for a spending package for FY 2017.

Given that appropriations bills provide a strong framework for how a spending package looks, NASFAA will stay engaged with this process in order to provide feedback on year-round Pell Grants and the use of the Pell Grant Program surplus.

Stay tuned to Today’s News for more information about the FY 2017 budget and appropriations process. To learn more, visit NASFAA’s Budget and Appropriations Page for more information and a news archive.


Publication Date: 6/8/2016

Angela A | 6/9/2016 9:11:04 AM

How will year round Pell affect the 600% LEU, will it be a disadvantage to those students who are close or nearing the limit?

David S | 6/8/2016 12:16:18 PM

Good news/bad news, and not sure which outweighs the other. Love YR Pell, especially with a provision in the bill to keep ED from over-regulating it, and I hope Congress understands the long-term benefits justify the short-term price tag. But as important as the NIH is, what a bad precedent to see the Pell surplus used as an all-purpose fund for unrelated purposes.

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