Economy

See How Congress Made Sure 2015 Will Not Be Any Better For Students

December 20th 2014

By:
ATTN: Staff

The new year will bring new rules the Pell grant programs. In 2015, after they passed the mammoth spending bill right before the year's end, Congress will cut $303 million from the program, which provides financial aid to poor students who need assistance to attend college.

So what happened exactly?

The Pell grant program, which totals $23.5 billion, had been running a surplus of $4.4 billion. According to The Washington Post, the plan is to take $303 million from that surplus and use it to pay private companies that collect student loan payments for the federal government. According to Democratic Sen. Tom Harkin's office, the government stopped paying these private companies, such as Great Lakes, last year and continued non-payment risks chaos if these companies stop administering the loans. Harkin is the chairman of the subcommittee that deals with the program.

Critics of this decision, according to the Post's reporting, say that these cuts will imperil the program as soon as next fall. Additionally, there's a question of why the Pell program specifically must be cut so the federal government can pay its bills.

Who is helped by Pell grants?

Low-income students. Most Pell grants go to students coming from households with incomes under $20,000, but students whose parents make as much as $50,000 can be eligible. A quarter of Pell recipients come from households that make less than $6,000 a year.

Sixty percent of black undergraduates and 51% of Latino undergraduates benefit from the Pell grant program. 

How much are they worth?

In the 2011-12 school year, the program paid $33.4 billion to over 7.9 million students who qualified. That sounds like a lot money, but the problem is that the rising cost of higher education is making Pell grants less effective. For instance, for the 2013-14 school year, the maximum grant was $5,645. That covered about 31% of the cost of a year attending a four-year public school. In 1971, in contrast, the Pell grant covered 77% of the cost. For this 2014-15 school year, the maximum grant is $5,730.

Put that into the context of these cuts. Instead of taking that surplus of $303 million and covering a bigger chunk of the cost of college, the government used that money to pay some outstanding bills. It also seems like pulling money from this program is short sighted when the reality is that the U.S. will be short 3 million college educated workers. Getting more people to college is a vital goal that should withstand budgetary pressures. 

What can be done?

As we've discussed many times, Congress will not prioritize the issues that matter to young people unless young people vote. Register to vote at OurTime.org. Tell them to find other ways to pay the bills.