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President's Perspective

Stephen Curtis

The Pell Grant Program: Funding and Future Prospects

(The following is an excerpt from a Jan. 5, 2011, white paper entitled, “Community Colleges and Congress: Ten Issues for 2011,” by David Baime, senior vice president for Government Relations and Research at the American Association of Community Colleges.)

Without doubt, the Pell Grant program represents the federal government’s most important investment in community college education, assisting close to 3 million students each year. Community colleges serve the highest percentage of low‐income students in traditional higher education, and their campuses would look dramatically different without Pell Grant support. Overall, more than 8.7 million students are projected to receive grants next academic year, a phenomenal 64% increase from 5.4 million just four years before.
 
The Pell Grant program has traditionally enjoyed bipartisan, bi‐cameral support and has been strongly backed by the executive branch through a series of administrations. The desirability of increasing the maximum grant has been a given. For a program of its size, it has been remarkably free of criticism about its purpose or effectiveness. Pell Grants are awarded directly to students rather than to institutions, and this has helped the program stay out of the line of fire of some of the negative critiques of higher education writ large.

In the last three years, the Pell Grant program has expanded dramatically, all to the good of community college students. The maximum grant grew from $4,310 in award year 2006–2007 to $5,550 in award year 2010–2011. This $1,240 increase alone represented 46% of the average community college tuition in fall 2010. Increases in the Pell Grant maximum equate to tuition reductions for the neediest students. Unfortunately, close to a third of all eligible community college students fail to apply for the grants, a situation that AACC is committed to changing.

Pell Grants function as an entitlement program such as Social Security, but unlike true entitlement programs, Pell Grant funding requirements are not automatically met by the U.S. Treasury, and appropriators have to identify funding each year regardless of student demand. Pell Grant shortfalls occur when the number of actual recipients exceeds projected levels. And for the last few years, the number of Pell Grants awarded surged beyond all expectations. The spike in the number of awardees is due to increases in the maximum grant, which also make more students eligible for grants, to the sharp rise of for‐profit student awards (increasing to more than 1.5 million from fewer than 500,000 for the decade ending in 2008–2009), and to the economic downturn, which has stimulated larger college enrollments and created greater financial need for those who attend. The FY 2010 budget reconciliation bill provided $13.5 billion in shortfall funding, but even that left appropriators needing to find another $5.7 billion in FY 2011. This shortfall was eventually retired, but only after protracted advocacy by all of higher education and despite resistance from some key members of Congress.

The annual cost of the Pell Grant program now approaches $35 billion, a colossal sum even in red ink–drenched Washington. This cost represents about 45% of the U.S. Department of Education’s overall budget. Given this perilous funding situation, all signs are that the recent boom years for the Pell Grant program are drawing to a sudden, problematic close. Many members of the 112th Congress will be fixated on restraining expenditures, and the Pell Grant program, with its recent maximum grant increases and ongoing financing difficulties, could be targeted for retrenchment. AACC intends to vigorously oppose any such efforts. Maintaining a robust Pell Grant program, with the basic educational opportunity that it embodies, will remain front and center for AACC in the next Congress and for the foreseeable future.