Gates Foundation Works to Save Pell Grants

Pell Grants, which currently help more than 9 million low- and moderate-income students attend and complete college, have faced funding issues in recent years. In July 2012, the House Labor-HHS-Education appropriations subcommittee voted to fully fund Pell Grants for the 2012-13 school year. But with the fate of the Pell Grant undecided in upcoming years, the Bill and Melinda Gates Foundation, which supports keeping the Pell Grant an entitlement at the center of need-based aid programs, wants to know what recommendations organizations in the higher education sector have to keep funds readily available.

According to the Department of Education, the Federal Pell Grant program provided $35.7 billion in aid, more than double the amount of aid awarded in 2008. The number of eligible Americans continues to increase, along with tuition; however, there has been some talk from the House Budget Committee in the past year of slashing funding and eligibility for the Pell Grant and eliminating the subsidy on in-school interest for the federal Stafford loan in hopes to improve the deficit on U.S. spending. In contrast, President Obama proposed a budget that fully funds Pell Grants through the 2014-15 school year and limits students’ need to borrow loans by expanding work-study jobs and keeping the interest rate on the subsidized Stafford Loans at 3.4 percent.

As a part of their Re-imagining Aid Design and Delivery project, the Bill and Melinda Gates Foundation offered grants to organizations to recommend what changes they would like to see made to federal financial aid. Several white papers from organizations including the Institute for Higher Education Policy (IHEP) and the Association of Public and Land-grant Universities (APLU) made suggestions that would ultimately keep Pell Grants and lower interest rates in place, but also would put stricter rules on institutions, particularly those with higher cohort default rates and lower completion rates.

To read IHEP’s white paper titled, “Making Sense of the System: Financial Aid Reform for the 21st Century Student,” visit http://www.ihep.org/assets/files/publications/m-r/reimagining-aid-design-and-delivery-final-january-2013.pdf.

To read APLU’s white paper titled, “Federal Student Aid: Access and Completion,” visit http://www.aplu.org/document.doc?id=4276.

Department of Education

House Budget Committee

Obama budget

Re-imagining Aid Design and Delivery project