Deal To Keep The Government Running Cuts $303M From Pell Grant Program

Congress’ deal to keep the federal government up and running may be coming at the expense of some of the nation’s poorest prospective college students. The spending package is poised to cut $303 million from the Pell Grant program.

The Washington Post reports that instead of using the portion of surplus dollars to fund college for lower-income students, it will now be used to pay companies that collect student loans on behalf of the Department of Education.

The Pell Grant program, which awards funds that don’t have to be repaid to students whose household incomes are generally less than $30,000, provided 9 million students with $33.7 million in grants during the 2013-2014 school year.

The Post reports that the cut is only a small fraction of the Pell Grant program’s current $4.4 billion surplus.

The measure, which was introduced by retiring Iowa Senator Tom Harkin, would fix a 2013 budget deal that eliminated mandatory payments to loan servicers working for the Dept. of Education.

Officials with Harkin’s office say that if the nonpayment issue wasn’t addressed then the industry could have suffered furloughs, creating a disruption in service to the millions of borrowers repaying student loans.

Although the funds being cut from Pell represent a surplus in the program, student loan advocates say the deal could prove to be hurtful to students in the future.

According to the Congressional Budget Office, the Pell Grant surplus could become a deficit as early as 2017.

“We constantly worry that any spending bill is going to involve negotiations over Pell,” Jennifer Wang, policy director at Young Invincibles tell the Post. “We have seen funding shortfalls in the past and Congress always ends up having to find additional dollars elsewhere to fund the program. Why put students in that position again?”

But officials with Harkin’s office say that a looming Pell deficit isn’t set in stone.

“The demands placed on Pell during the recession, when thousands of people entered or went back to school, have changed as the economy has improved,” Harkin spokesperson Susannah Cernojevich tells the Post. “This bill provides sufficient funding to increase the maximum award, reinstates eligibility to some students cut off in 2012, and invests $4.1 billion in new surplus funding that Senator Harkin believes will be sufficient to ensure the Pell does not face any significant funding gap in FY 2016.”

Still, advocates maintain that Harkin’s view of the situation is short-sighted.

Many groups including Young Invincibles and the Institute for College Access and Success have begun a campaign to protect the program, writing letters to members of Congress and urging students to call their representatives to prevent cuts.

Congress cuts federal financial aid for needy students [The Washington Post]