Pell Grant Now More Lucrative, Restrictive

    The U.S. Department of Education recently released
    guidelines regarding this year’s awards for the federal Pell Grant program,
    opting to raise the maximum possible award while simultaneously lowering the
    number of students qualifying for aid.

    The increase in the funding of one of the nation’s largest need-based grant program stems from
    the College Cost Reduction and Access Act, signed into law by President George
    W. Bush in September. The CCRAA allotts an additional $490 per eligible student
    for the 2008-09 Pell Grant award year.

    The CCRAA funds, coupled with a $69 decrease in
    discretionary funding, nets an overall increase of $421 for eligible students —
    making the maximum award $4,731 next year.

    While the changes increase the maximum amount of money for
    each student who receives a Pell Grant, they do not make the grant more
    accessible, said Mark Kantrowitz, founder of financial aid Web site

    “Even though the maximum Pell Grant has increased, the $69
    decrease in discretionary funding will slightly reduce the number of students
    who otherwise would be eligible for a Pell Grant,” Kantrowitz said.

    The maximum award could be raised in the future, as Bush
    plans to request a $2.6-billion increase to the Pell Grant program from
    Congress later this week. An increase of this magnitude would bring the maximum
    total award between $5,100 and $5,400.

    The current White House administration is asking for almost
    $60 billion overall for education this year. However, this amount, nearly equal
    to the money allotted for the past year, has not been adjusted for inflation.

    While the overall amount of money that Pell Grant recipients
    will take home this year has gone up, the maximum Expected Family Contribution
    — the amount of money a student’s family can contribute to his or her education
    — has been reduced from $4,110 to $4,041. Therefore, students with an EFC from
    $4,042 to $4,110 who were able to benefit from funds last year will no longer
    be eligible for federal aid under the Pell Grant program.

    Kantrowitz said the bottom line is that while slightly fewer
    students will qualify for the Pell Grant, the remaining Pell Grant-eligible
    students will get $421 more each.

    “That’s a fairly substantial increase, although it does not
    make up for four years of no increases,” he said.

    In addition to the monetary boost, the payment and disbursement
    schedules for Pell Grant funds have also changed. While alternate payment and
    disbursement schedules were previously used in addition to the main schedule,
    the repeal of the Tuition Sensitivity Rule now bases all awards on a single
    payment schedule for all students.

    The TSR, originally part of the Higher Education Act,
    reduced Pell Grant funds for students who chose to attend colleges with lower
    tuitions. The HEA is currently in its eighth extension, and its reauthorization
    will be put to yet another vote before this extension expires on April 30. Rep.
    George Miller (D-Calif.), who serves as chairman of the Committee on Education
    and Labor, indicated in a press release that if it is reauthorized, the repeal
    of the TSR is expected to become permanent.

    If the reauthorization passes, students attending low-cost
    community colleges will be the most affected group, as the bill would raise
    their funding to be equal with their peers attending more expensive
    institutions. UCSD will not be one of the institutions affected by this
    reversal from an alternate payment schedule as undergraduates qualify for the
    maximum Pell Grant already.

    “The alternate schedule is not applicable at UCSD because
    our cost of attendance is not less than $805,” said Ann Klein, senior associate
    director at UCSD’s Financial Aid Office.

    UCSD expects to have close to 7,200 Pell Grant recipients
    this year, totaling nearly $24 million in Pell Grant funds, Klein said.

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