Bill Would Restore Pell Grant Eligibility For Students Who Attended Defunct For-Profit Colleges

The Federal Pell Grant Program provides need-based grants to low-income students to help pay for college, but the funds come with limitations: They are only available for six years or 12 semesters, and when that time is up the funding is gone. So when now-bankrupt Corinthian Colleges Inc. abruptly closed its Wyotech, Heald College and Everest University campuses in April, thousands of students who relied on Pell money were left with few options for continuing their education elsewhere. A new piece of legislation aims to help these stranded students get back on track.

On Wednesday both the Senate and the House took steps to ensure students have the opportunity to continue their education by introducing companion bills that would restore Pell Grant eligibility under certain circumstances.

The Pell Grant Restoration Act of 2015 [PDF] would restore benefits for students who attended an institution of higher education that closed due to misconduct, which would obviously include the former Corinthian schools.

While the Higher Education Act provides for the discharge of students’ federal loans if a school closes before students complete their programs, it does not reset the clock on a student’s eligibility for Pell Grants, and students may not have enough Pell Grant eligibility left to complete a program at another school.

Under the measure, students would be eligible for restored benefits if their federal student loans were discharged through either compromise and settlement authority, defenses to repayment or statutory charges.

Additionally, students would be eligible if they qualified for a loan discharge, but did not take out federal student loans.

Illinois Senator Dick Durbin, who joined Sen. Barbara Boxer of California and Rep. Bobby Scott of Virginia in introducing the bills, said the Act came to the forefront as a way to address the thousands of students who attended now defunct Corinthian College’s Everest University, Wyotech and Heald College campuses.

“In spite of the warning signs, the federal government did not step in soon enough to prevent Pell Grant funding from being wasted on the failed Corinthian Colleges system,” Durbin said in a statement. “It is only fair that the students who were misled into failing programs have their Pell Grant eligibility restored. We shouldn’t be punishing students for the bad actions of for-profit college CEOs.”

In the case of Corinthian College’s abrupt closure, students were immediately facing difficult circumstances, having to figure out whether they could afford to continue their education, which school they could transfer to, what credits would count and how they would pay for it.

“Forgiving the debt of students defrauded by for-profit colleges and restoring their eligibility for Pell Grants not only is fair but also smart policy, providing an opportunity for motivated, capable students to pursue the higher education they deserve,” said California Rep. Janice Hahn said in a statement.