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.