The Future of the Pell Grants and the Potential Effects to the Federal Aid System

by Winona Weindling

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Pell Grants are the primary source of federal aid for U.S. students. The fiscal year 2018 spending plan approved by the Senate Labor, Health and Human Services Appropriations Subcommittee includes a $100 increase to the maximum Pell Grant award amount. This increase will benefit students as a safeguard against inflation. The increase was supported by democrats and republicans, and was applauded by the Institute for Higher Education Policy (IHEP): "This increase is an essential -- yet modest -- step forward in helping our neediest students cover ever-increasing college costs," says Mamie Voight, IHEP vice president of policy research.

However, the fiscal year 2018 funding bill also proposed rescinding $2.6 billion from Pell Grant reserve funds. This follows a $1.3 billion cut to the reserves in the 2017 spending plan. The Pell reserve funds are in place to protect students in the case that the program faces a funding shortfall, which has occurred in the past. Since all students who apply for federal financial aid are guaranteed the full amount of the Pell Grant for which they qualify, if the program has a shortfall and there is not enough money in the Pell Grant reserve fund, Congress has to cut student-aid programs to maintain the guaranteed grant amount.

These proposed cuts could have substantial negative effects on students. "Pell Grants are the cornerstone of our nation's financial aid system and are critical to supporting college access and persistence for students in need," says Voight. "Millions of students in need rely on the Pell Grant to ease the burden of rising college prices -- a burden they must bear because they do not have the resources to independently finance their education outright. And continued access to Pell Grants positively impacts student persistence. No American should have to forego a college education simply because they are poor."

The proposed cuts also weaken the federal aid system as a whole. "Decreasing existing reserve funds flatly denies the value of the grant program and destabilizes its strength in the long term," says Voight. Having sufficient funds in the reserve to protect against a funding shortfall is crucial to ensure that the program is not cut in the future and to ensure that all students in need continue to receive funding. IHEP issued a press release urging Congress to maintain the strength of the federal aid system: "We urge lawmakers to preserve Pell Grant funds and work to fortify this building block of our federal financial aid system for years to come," states Voight in the release.

While advocates continue to push for the preservation of the reserve fund, the future of Pell Grant funds is not yet certain. In the meantime, students should continue to prepare financially for college costs, and financial aid staff should help students apply for all aid for which they are eligible. "Financial aid professionals should urge students to continue completing the FAFSA as early as possible," says Voight. "Applying for aid is the most important step toward certainty in any individual student's award."