Eligibility for Pell Grants restricted
The good news for federal student aid recipients in 2012: The maximum Pell Grant benefit amount will remain at its record high of $5,550. The bad news: Fewer students will be eligible for Pell Grants, and costs may rise on other federal aid programs.
Changes to federal student aid programs
Congress finally passed the long-awaited 2012 spending bill on Dec. 17, outlining over $1 trillion in federal spending in the upcoming year. Alongside military and domestic allocations are a series of reforms to the Pell Grant program that could impact some 100,000 college students. Transfer students and minorities are among those affected the most by the changes, according to The Institute for College Access and Success, or TICAS.
The Pell Grant program is a key component of federal financial aid. Targeted at low- and middle-income students, the Pell Grant awards funds based on factors such as the applicant's annual family income and school cost. The popular program awarded grants to more than nine million students in 2011, at a cost of $36.6 billion. However, the cost of the Pell Grant program has more than doubled in the past three years, making it a target of cost-cutting legislators.
The new Pell in 2012
Faced with a $1.3-billion shortfall in funding for Pell Grants, Congress voted to keep the maximum award amount the same but limit eligibility to make up the difference. New provisions of the 2012 Pell Grant include:
- A maximum benefit of $5,550 for the neediest applicants. This reverses an earlier proposal to reduce the award maximum to $4,705 per year.
- Eligibility is limited to 12 semesters, down from 18 in 2010-2011. Effective July 1, 2012, the new limit will affect an estimated 62,000 recipients.
- The family income level at which families are not required to contribute to college expenses will be reduced to $23,000, from $30,000.
- Students without a high school diploma are no longer eligible for Pell grants.
The changes affect just over 1 percent of Pell recipients, but will save an estimated total of $11 billion over 10 years, according to the Congressional Budget Office. However, critics point out that the new time limit adds another obstacle for part-time students or students in need of remedial education in college, who already struggle with low degree completion rates.
"An immediate retroactive time limit is like changing the rules in the middle of the game," TICAS Vice President Pauline Abernathy said in a statement. "... After years of studies, students who are depending on Pell Grants to cross the finish line will suddenly be sidelined."
Part-time students and students taking remedial courses use their Pell eligibility at the same rate as full-time students, further challenging students who may need additional time to complete college.
Cuts to the Pell Grant program are unpopular among the U.S. public. An Oct. 24 Harris Interactive poll found that 84 percent of the U.S. public supports cutting government spending, yet 81 percent also support increased education spending. Legislators must balance the demand for access to higher education with a need to trim the federal budget.
Other federal financial aid changes
In addition to the Pell Grant savings, the federal government plans to trim the budget with changes to these financial aid programs:
- Subsidized undergraduate direct loans (Stafford): The new legislation eliminates the six-month grace period on loan repayment after a student graduates or leaves college for loans originating between July 1, 2012 and July 1, 2014.
- Federal Work Study and Supplemental Educational Opportunity Grants: Funding for these programs will be cut by 0.189 percent in 2012.
- Strengthening Institutions program: This program supporting minority-serving colleges will see its budget cut from $84 to $81 million.
- International programs. Funding for international study and foreign language programs will be cut by $2 million, reducing the total budget to $74 million.
The neediest of college students can still count on the same level of federal student aid. However, students pursuing a degree part-time and those with moderate incomes may see their college expenses rise in 2012.
More from TheDegree360:
How the IRS can help pay your tuition
Education advocates rally to preserve Pell Grant funding
Congress mulls relief option for student loan debt
