Thursday, October 30th, 2014

The Obameter

Expand Pell grants for low-income students

"Will continue to work to ensure that the maximum Pell Grant award is increased for low-income students. Specifically, he will ensure that the award keeps pace with the rising cost of college inflation."

Updates

Pell Grant boost is now in federal law

In March 2009, we reported on President Barack Obama's ongoing efforts to expand Pell Grants, a federal program that helps low-income students pay for college. At the time, we noted the president's signing of the stimulus bill, which -- combined with other previously approved sources of funding -- set the award level at $5,350 per student for the 2009-2010 school year. We ultimately rated this one In the Works, since we wanted to see how Congress would respond to the proposed 2010 budget, which included further increases.

Since then, three key developments have taken place:

• Congress appropriated $17.5 billion for the program, expanding the 2010 award to $5,550 per student, an increase of $200 over the 2009 level.

• The 2010 budget did not transform the Pell Grant program into an entitlement, which would result in automatic annual funding. The fund was also not indexed for inflation. But the 2011 budget proposes to do just that. According to the National Association of Student Financial Aid Administrators, the budget "seeks to increase the maximum award by $160 to $5,710 in 2011. After 2011, the maximum award would increase annually by the rate of inflation plus 1 percent, increasing it to an estimated $6,900 by 2019."

• On March 30, 2010, Obama signed legislation that would cut subsidies for private banks to act as intermediaries in providing loans to college students. Approximately $36 billion of the savings will be used to expand the Pell Grant program over the next decade. The maximum award per student would increase to $5,975 by 2020.

To recap: Obama's stimulus bill raised the maximum award to $5,350. The 2010 budget raised it even higher, to $5,550. It did not transform the program into an entitlement and index future increases for inflation, but Congress is set to reconsider both measures. Even if it fails, however, the recently signed health care legislation included a change to student loans that calls for future increases until 2020. Promise Kept.

Sources:

The New York Times, Obama Signs Bill on Student Loans and Health Care, by Peter Baker and David Herszenhorn, March 30, 2010.

National Association of Student Financial Aid Administrators, Obama's 2011 Budget Proposal Increases Pell Funding, Cuts LEAP and Byrd Scholarship, February 2, 2010.

SmartMoney, Health-Care Reform and Your Student Loans, March 24, 2010.

Both stimulus and budget send dollars to Pell Grants

President Barack Obama is a big fan of Pell Grants, a federal program that helps low-income students pay for college.

He kicked off his Pell Grant efforts by signing the stimulus bill, which sent an additional $15.6 billion to the grants and another $200 million to work-study programs. Taken together with other previously approved funding, the maximum Pell Grant per student would be $5,350 for the school year starting in 2009.

Obama's budget outline, released Feb. 26, 2009, proposes enough money to boost the maximum Pell Grant to $5,550 for 2010. In addition, his budget would require Pell Grants to receive automatic funding each year and index the grants to inflation. That indexing was a key part of his promise.

Obama still must get his budget through Congress. His proposal to expand Pell Grants gets this promise to In the Works.

Sources:

Thomas, The American Recovery and Reinvestment Act of 2009

Speaker of the House Web site, Joint Explanatory Statement: Section A , p. 65, Feb. 12, 2009 (pdf document)

Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009

Office of Budget and Management, Summary Tables , Table S-6, page 124, accessed Feb. 26, 2009