Proposed changes to Pell Grant will reduce eligibility

By Isaac Graham · The Mainstream
Published November 2, 2011

Current recipients of government financial aid may want to study Congress’s proposed changes to the Pell Grant because although the annual grant will stay at $5,500, fewer students will receive it.  The many changes to student eligibility have been suggested in an attempt to maintain the $5,500 total in the midst of budget cuts.

According to Libby A. Nelson of Inside Higher Ed, “The eligibility changes would hit particularly hard at community colleges.” 

The most pressing change would affect the formula used to calculate eligibility. Currently, an amount reserved for basic living expenses  is subtracted from a student’s total income before eligibility is calculated (called the “income protection allowance”). Subtracting this amount from a student’s total income increases the chance the student will be awarded the Pell Grant.  Although the proposition does not suggest an abolishment of this allowance, it does change the formula so that a student’s income can look higher, thereby reducing Pell Grant eligibility.

In short, more of student income will be expected to go directly toward college.

According to an estimate posed by the Congressional Budget Office, this change alone would save $2.1 billion in 2012.

Students should also be aware that the new formula will bring some income into the equation that is not currently considered.   This change is not without controversy.  “Allowing more untaxed income (such as welfare benefits, the earned income tax credit and untaxed social security benefits) to count toward eligibility would have a bigger effect on needier recipients,” said Nelson. 

Under the new proposition, some students who may have formerly received aid would be completely ousted from the program.

“If you’re a household that was already just over the edge of eligibility for Pell, you see even the slightest reduction and boom, you’re out,” said Bryan Cook, director of the Center for Policy Analysis at the American Council on Education.

One such group of students would be those who are now eligible for only 10 percent of the maximum grant or $550. They would no longer be eligible at all and will receive no funds under the proposed changes.

Additionally, students without a high school diploma or GED will be completely ineligible.  This means that high school students looking to get a head start in their college education would not qualify to receive any Pell Grant financial aid.

Half time students are also not eligible.  This change would affect a relatively small number of students, but would still disqualify some.  Another amendment that would affect a few students is the decrease in the semester limit.  The grant would now be available for only 12 semesters rather than the current 18 semesters. 

The new tightening of the eligibility requirements is an interesting turn of events as eligibility was broadened as recently as 2007 in the College Cost Reduction and Access Act. This broadening had increased the maximum grant reward.

For more information on the proposed Pell Grant changes, visit www.insidehighered.com and search Pell Grant.