Protect the Pell surplus

U.S. Education Secretary Betsy DeVos (second from left) last month before House appropriators to discuss the president's proposed 2018 budget for federal education programs. (Photo: Associated Press)

The Trump administration has a funny way of showing support for the Pell Grant program, which helps low-income students afford college.

First, in its recently released federal budget proposal, the administration proposes to bring back the year-round Pell Grant program — a popular idea already enacted into law weeks earlier by Congress — by cutting money allocated for the grant.

Then, it proposes “safeguarding” Pell by pulling out $3.9 billion from its accumulated surplus.

Restoring year-round Pell is to be celebrated – although the credit goes to Congress, not the administration. But don’t let that good news distract from the Trump budget’s deeply damaging proposals that target higher education and student aid — including raiding the Pell surplus.

Repurposing a surplus may not sound like the most outrageous or damaging proposal in President Donald Trump’s budget. But it’s a slap in the face to millions of students who made sacrifices to build up that safety net. After all, the current $10.6 billion surplus did not appear out of thin air. It was paid for by students, for the sake of students. And any amount that gets taken from the surplus today increases the odds of deeper cuts tomorrow.

The back story

Understanding how hard-fought the Pell surplus is requires a look at the program’s recent history.

For years, Pell — which next year will offer up to $5,920 a year per qualifying student — had been in a fairly steady state of size and funding. But the financial crisis beginning in 2007 meant that more people — traditional-aged students as well as adults — couldn’t get jobs, so education became the answer to their predicament.

At the same time, many families were worse off financially, so more students qualified for the Pell. Congress also made the Pell award more generous through three infusions of funding in 2007, 2009, and 2010.

As a result of these changes, the number of Pell recipients skyrocketed from 5.5 million for the 2007-2008 school year to 9.3 million just three years later. The cost of the program ballooned by billions of dollars.

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. It is reprinted with permission.

To grapple with this funding crisis, Congress first cut $2.1 billion a year in costs by eliminating the year-round Pell eligibility that had been established only a few years earlier. That means that students taking summer classes to finish school more quickly couldn’t get a Pell Grant to pay for those extra summer credits.

Next, Congress eliminated a subsidized loan option for graduate students with financial need, which means that those grad students are racking up interest even while they are in school, and typically not earning a salary that would help them make payments. That cut was estimated to save $18 billion over 10 years.

Finally, the 2012 budget trimmed back Pell eligibility even further, to save another $11 billion over 10 years.

It reduced the number of semesters for which a student can receive Pell from 18 to 12, made it harder to automatically qualify for the maximum award, and eliminated the ability of students without a high school diploma or its equivalent to get access to federal aid.

Most of these cuts remain in place. However, the financial aid for students without a diploma was restored in a more limited form. And just this month, Congress restored year-round Pell as part of the agreement to fund the government through September.

The 2012 budget cuts alone were estimated to make at least 100,000 Pell recipients ineligible. These cuts and others had bipartisan support because they got the Pell program back on sound footing, with help from the improving economy as well.

But the cuts also meant that real students had to take on more debt — and in some cases, give up on their college education.

Targeted surplus

The Pell Grant surplus was built by students, but now the Trump administration wants to strip it away from them. And for what? We don’t know exactly, but we do know it’s not for education priorities. Trump’s budget proposal seeks to slash a total of over $9 billion — nearly 14 percent — from the Department of Education budget.

It shrinks or eliminates crucial programs for low-income college students, and doesn’t offer any inflation increase for the maximum Pell award.

So, it stands to reason that the administration is seeking to drain the Pell surplus in favor of some other agenda – perhaps defense spending or the border wall. Not only would this rob students of yesterday, but it also puts future enrollment at risk.

The smaller the Pell cushion, the greater the odds the program will run a shortfall the next time a recession hits and enrollment spikes again. And you can bet that Congress won’t acknowledge the past raids on the surplus and restore funding. Instead, we’ll get another round of press releases about cuts to make the program “sustainable.”

That’s not right. Students already paid once for the Pell Grant surplus. Don’t make them pay again.

About the Author

Marcella Bombardieri / Ben Miller
Marcella Bombardieri is a senior policy analyst at the Center for American Progress, a public policy research and advocacy organization. Ben Miller is the senior director for postsecondary education at the Center for American Progress.