Federal Policy Update
Copied below is a note that AASCU President, Muriel Howard, sent to your presidents and chancellors on Monday.  I hope that many of you have seen this, but wanted to make sure you all had the opportunity to review this.  AASCU will hold a conference call on Friday, June 24, to discuss this note and federal financial aid more broadly.  The call will take place at 1:00 pm EDT (10:00 am PDT) to which you are all invited.  I will be sending out the details for the call later today.  I hope that you will be able to participate.

Should you have any questions please do not hestitate to contact me.  Thanks.

Robert L. Moran

Director of Federal Relations

American Association of State Colleges and Universities








AASCU Presidents and Chancellors


Muriel A. Howard


June 20, 2011


Pell Grant Program

Dear Colleagues,


Recently, before an audience of mostly college presidents/chancellors, I participated in a panel focusing on the current budget dynamics facing student financial aid programs, specifically the Pell Grant Program.  My impression after that session was that presidents/chancellors know that there is a budget problem with the Pell program, but may not fully understand either the extent or nature of the problem.  I am writing to share the essential details and to offer my insights as you assess the impact of potential changes to the program. 


I urge you to be actively engaged in dialogue with Congress about the Pell Grant program.  While I understand the economic challenges everyone faces within their home state, the higher education community must, collectively, make the case for this bedrock financial aid program. We need to ensure that the federal government maintains their commitment to our neediest students.  My fear – one I am certain you share – is that a reduced federal commitment will spur further state-level reductions or more deeply exacerbate the conditions you currently face.




Demand on the federal Pell Grant Program has grown from just over six million students in 2008 to a projected 10 million in 2012.  This growth, coupled with the increase in the maximum award included in the 2009 stimulus bill, has resulted in program costs rising roughly 2.5 times over the past 4 years, from $17 billion to roughly $40 billion. In the FY 11 continuing resolution, Congress included a proposal contained in President Obama’s proposed FY 12 budget to eliminate year-round Pell.  This resulted in a savings of $7 billion for the program.  After applying these savings, the level of funding needed to sustain the maximum $5,550 Pell Grant award for the current eligible population dropped to $34 billion.


The problem we face is that the FY 11 funding amount for the program is $23 billion.  In the current fiscal environment on Capitol Hill, finding the $11 billion difference to fully fund the Pell Grant Program is only possible by making draconian changes to student eligibility and award levels.


With an estimated $23 billion in funding available for a program that costs $34 billion to maintain a $5,550 maximum award, policy makers and higher education policy experts are between a rock and a hard place. To maintain the maximum grant award at $5,550, one option would force about 30 percent of current Pell Grant recipients out of the program. Another option would hold constant the current number of Pell Grant recipients; this option would result in a maximum grant award of approximately $3,500.  Finding a single, acceptable solution is elusive. All proposed changes will hurt students but we need to minimize their affect on students—and subsequently on institutions—while finding cost reductions that yield $11 billion.


The Debate


AASCU has been engaged in discussions on the Hill, with the Administration, and among the six presidential associations to explore better options than those publicized by pundits and policy analysts at think tanks.  Some have proposed using funding offsets from other student aid programs; however, they recognize that in order to address the long-term sustainability of the Pell Grant Program, programmatic changes must be at the core of any proposal.


Staffs from the six presidential associations are developing a discussion paper proposing policy/program changes that could result in significant savings, but these changes will not fully close the $11 billion gap.  The changes center on refining program eligibility, better stewardship of program funds and, to the extent possible, promoting completion.


Non-institutional research and think tank pundits have offered suggestions for reforming the program that include:


·         requiring an enrollment status of 15 credits, instead of the current 12, in order to receive a full maximum award;

·         reducing the number of semesters for which a recipient can receive Pell, currently set at 18 semesters (9 years) – most of the diverse proposals limit eligibility to 12 semesters (6 years);

·         eliminating Pell Grants to students enrolled less than half time;

·         restricting institutional eligibility based on certain criteria (i.e. – default and/or graduation rates);

·         limiting eligibility for Pell Grants only to students whose families earn less than $50,000.


As you can see, many of these proposals could significantly affect campuses. It is important that you have institutional-level data in order to effectively evaluate the impact of any proposal.


Institutional Concerns


As a campus leader, when faced with proposed funding or policy alterations, I would gather institutional data to best assess the impact of the options being discussed.  I implore you to have a discussion with your financial aid director and chief finance official about how changes to the Pell Grant Program might affect your campus.  Here is a list of very basic questions; this data will help campuses to effectively engage in the discussions:


·         How many students are currently receiving Pell Grant awards?

·         How many students do you anticipate will receive Pell awards for this coming academic year?

·         How many students receive the maximum award?

·         What is the breakdown of your Pell students’ enrollment status?

·         What impact would a reduced maximum award have on your Pell recipients?

o   Would it result in additional loan burden?  

o   Would it have an impact on student loan defaults?

o   What impact might it have on enrollment and retention?

o   What effect would reduced enrollment have on your state appropriations or state grant awards?




The time to engage is now.  All federal financial aid programs, including TRIO, GEAR-UP, and Supplemental Education Opportunity Grants (SEOG), are facing fiscal uncertainty.  AASCU will continue working behind the scenes to provide Congress with a more informed perspective on proposed changes. I am asking you to engage your community, write op-ed pieces for your local papers, reach out to your Congressional representatives in their districts as well as in Washington, and work with your student and faculty groups.  The message of supporting the current $5,550 Pell Grant award must be heard by all decision makers. It can only be strengthened with your institutional data and your personal intervention.


I invite you to call me if you have any questions.


Muriel A. Howard, Ph.D.





American Association of State Colleges and Universities.
5th Floor 1307 New York Avenue, N.W. Washington, D.C. 20005
Phone 202-293-7070 | Fax 202-296-5819 | www.aascu.org

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