University Business - June 2011 - (Page 25)

FINANCIAL AID Kinder, Gentler Pell Cuts Proposals for reducing costs while avoiding across-the-board cuts By Haley Chitty R EPUBLICANS AND DEM ocrats agree: e projected cost of the Pell Grant program is unsustainable. Now policymakers are looking at the best ways to reduce costs. In its 2012 budget proposal, the Obama administration proposed eliminating the year-round Pell Grant program and student loan subsidies for graduate and professional students to help oﬀset what the administration estimates will be a $20 billion funding shortfall for the 2012-13 award year. e proposal to eliminate the year-round Pell Grant program was fast-tracked when Congress included this provision in the FY2011 spending bill. As a result, students will not be able to receive a second Pell Grant award in the 2011-12 award year. Unfortunately, the elimination of year-round Pell appears to be just the start. In their FY2012 budget outline, House Republicans have proposed rolling back 2012-13 Pell Grants to FY2008 levels. According to a Congressional Budget Oﬃce estimate, this would reduce the current maximum Pell Grant of $5,550 to $3,040 for the 2012-13 award year. While it is unlikely this budget outline will be adopted by Congress, it demonstrates Republicans’ desire to dramatically cut Pell program costs. The elimination of yearround Pell appears to be just the start. simply slashing awards across the board. In a recent student aid policy analysis, Mark Kantrowitz, the publisher of Fastweb.com and FinAid.org, lays out 14 options to reduce the cost of the Pell program that would be “less harmful” than cutting the maximum award as House Republicans have proposed. In addition, a group of seven prominent economists who focus on higher education research oﬀered ﬁve options to cut costs in the “least destructive manner.” ese economists include: • Sandy Baum of the School of Education and Human Development at e George Washington University (D.C.) • Susan Dynarski of the Ford School of Public Policy and School of Education at the University of Michigan • Art Hauptman, a higher education consultant and contractor • Bridget Terry Long of the Harvard Graduate School of Education • Mike McPherson of the Spencer Foundation • Judith Scott-Clayton of the Teachers College at Columbia University • Sarah Turner of the Curry School of Education at the University of Virginia. e economists outlined the goals of their options in a letter to the College Board. e letter states that modiﬁcations or cuts to the Pell program should be made with a clear eye to facilitating access for students who are prepared to succeed in college and to encouraging students to complete their postsecondary studies in a timely fashion, without sacriﬁcing the targeting of funds to the students who need them the most. e options outlined by Kantrowitz and the group of economists share several similarities. LIMITING SEMESTERS OF ELIGIBILITY Both proposals suggest reducing the time that students can be eligible to receive Pell Grants. Currently, students can get Pell Grants for 18 semesters—roughly eight years of college. e policy experts suggest reducing this to six years. e letter to the College Board notes that only 3 percent of Pell recipients receive a grant after six years. Reducing eligibility to six years (12 semesters) would save about $800 million and would also encourage students to complete their degree sooner. Haley Chitty is director of communications at the National Association of Student Financial Aid Administrators, www.nasfaa.org. June 2011 | 25 ALTERNATIVE PROPOSALS FOR COST CUTTING As the prospect of additional Pell Grant program cuts in the FY2012 budget grows, leading student aid policy experts have taken the initiative to propose strategic ways to reduce funding instead of universitybusiness.com http://www.Fastweb.com http://www.FinAid.org http://www.nasfaa.org http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - June 2011

University Business - June 2011
Contents
Editor's Note
College Index
Ad Index
Behind the News
Sense of Place
Financial Aid
Independent Outlook
Four Fearsome Risks
Safra One Year Later
The Power of Green
Viewpoint
What's New
Internet Technology
End Note

University Business - June 2011