Pell Grant cuts begin in summer school

By Clay Duda, Juvenile Justice Information Exchange 

It might make for a more leisurely summer, but Kennesaw State University student Steven Welch didn’t dump college courses to have more free time. He did it because he couldn’t afford the cost.

Welch, 24, had to make the move because he no longer qualified for a Pell Grant to cover the cost of summer tuition.

Restrictions on the grant program, long used to help low-income and some middle-class students stem the cost of higher education, were enacted by Congress last year — but students are feeling the impact for the first time this summer as the changes are implemented across the country.

Before this summer, students could use more than the allotted $5,550 per year to help cover the cost of tuition and other school related expenses. Now, however, Congress has mandated that a student may not exceed a total of $5,550 per academic year, among other updates to the program.

The changes for many students come at a particularly harsh time, when student debt is at record levels and the number of students eligible for Pell assistance based on financial need is on the rise.

“I’m only taking two summer classes instead of four, and I’m paying out of pocket,” Welch said.

“Having the Pell Grant has been good,” he said, noting that it saved him from having to take out additional student loans to finance his college career. “Not everyone can pay out-of-pocket or don’t have good enough credit to get student loans, so it helps those in need.”

Amended from previous financial aid legislation and established in 1972 as the Basic Educational Opportunity Grant, the federally ran Pell Grant program has long offered assistance to students pursuing an undergraduate degree at public and private colleges across the United States without the obligation of repayment after graduation.

The percentage of college-aged students receiving the grant has increased in recent years, up to 35 percent during the 2010-2011 school year compared with 20 percent a decade earlier, according to Education Department reports.

Kennesaw State University sophomore Dennys Rosales, 19, (left) checks with the Financial Aid Office to see if his summer tuition will be covered by the Pell Grant.

The program has also faced a number of challenges in the past few years. Operating costs have more than more than doubled since the start of the recession – from a little more than $16 billion during the 2008-2009 academic year, to about $36 billion in 2011 – due in large part to an influx of qualified, lower-income students.

The maximum yearly award has also grown under President Barack Obama from $4,731 to $5,550, yet the skyrocketing costs of tuition has left the largest gap ever between the price of attending college and the amount covered by the Pell Grant. For the 2010-2011 academic year, the Pell covered an average of 32 percent of tuition costs, compared to 72 percent of costs in 1976.

“Even with the grant program [students] are still left with a bill that’s more than half their costs at a public university,” said Mark Kantrowitz, publisher of financial aid and scholarship resource sites and

Students receiving 100 percent of their yearly Pell allocation during the fall and spring semesters, but who still want to attend summer courses, will be forced to find another way to fund those classes, drop summer classes and stay in school longer, or ration Pell money awarded earlier in the year.

“The other options are basically student loans,” said Timothy Opgenorth, Director of Financial Aid at the University of Illinois at Chicago. “Even in Illinois the state grants are only good for the fall and spring terms.”

Opgenorth expects to see at least some decline in student enrollment this summer due to the new Pell restrictions, he said.

“Obviously, being in financial aid, we want to see all students be able to go to school,” said Opgenorth, pointing out that about 50 percent of undergraduate students at UIC received some level of Pell funding in the past year. “The less financial aid funding available – whether that’s grants or that’s loans – makes it tough for low income families [to afford the costs of college].”

The changes also cut the maximum amount of Pell grant money students can receive in their lifetime by a third, and exclude undergraduate students who receive a bachelor’s degree prior to hitting their lifetime maximum.

The new lifetime award for Pell recipients has been capped at 12 semesters, or 600 percent of the annual maximum pay out, whichever comes first. The lifetime limit is down from 18 semesters, or 900 percent, during the 2011-12 academic year.

And the effects are retro active, impacting students who may have received any Pell funding since the program was started in the early 1970s. For an estimated 2 million students that means they no longer qualify for Pell Grant money this fall, regardless of when they received their first slice of funding from the program.

The Pell Grant has always been dedicated to helping finance undergraduate degrees, but in years past students had the option to apply for Pell funding if they returned post-graduation to pursue another undergraduate degree or to take additional classes – but not graduate school.

For some, like 23-year-old KSU student Careese Stephens, that change means staying in school longer.

Stephens, a psychology major and medical school hopeful, postponed her own graduation in an effort to hold onto financial aid while taking required pre-med classes that were not part of her major.

The Department of Education, which tracks the Pell Grant process and student eligibility, began sending e-mail notifications in April to students who no longer qualified or are nearing their lifetime maximum for the grant.

“It’s frustrating,” Stephens said. “I had everything planned out, and then I got that e-mail. It’s forcing me to look at options I otherwise wouldn’t need to.”

Budget Battle

Back on Capitol Hill, the battle over financial aid funding continues to warm as both sides push budget proposals for 2013, and grapple with a national deficit now equal to the nation’s economy (or 100 percent of GDP).

“Right now, the Pell Grant program is still facing a budget shortfall,” said Kantrowitz, publisher of “We’re in a situation where more money for one form of financial aid may mean less money for another form of financial aid.”

Under President Obama’s proposed budget, yearly Pell Grant awards would increase to $5,635 next year to mirror inflation, but a $7 billion projected shortfall for the program still lingers for 2014.

As an alternative, the Republican-controlled U.S. House of Representatives passed the so-called Ryan budget, a proposal from Rep. Paul Ryan (R-Wis.), calling for additional cuts to student financial aid and other spending in an effort to help reel in a federal deficit expanding faster than the economy.

In a budget hearing last month, Education Secretary Arne Duncan said Ryan’s budget would have a “devastating impact on higher education.”

“It would cut almost $3 billion from Pell aid to students in 2013, eliminating almost 400,000 recipients, and reducing the awards of 9.3 million others,” Duncan said at the meeting. “It would also hurt borrowers and students at a time when average student loan debt for a graduating senior is already more than $25,000.”

The Ryan plan calls for a freeze on maximum Pell awards at $5,550, a yet-to-be-determined family income cap and the exclusion on many part-time students taking just one or two courses each year. It would also have Pell funding come up for annual review, leaving some funding advocates worried the program could face another round of cuts in the near future.

The Juvenile Justice Information Exchange (JJIE) is the only publication covering juvenile justice and related issues in the Southeast and around the nation on a consistent, daily basis. It is a member of the Investigative News Network.

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