At issue is a new FAFSA formula used to determine how much a student can afford to pay for a college education. Students who self-funded college can now receive a student aid index of minus $1,500 at the lowest level. A student with an index of zero to minus $1,500 is eligible to receive the maximum Pell Award amount of $7,395 for her 2024-2025 academic year.
However, the nearly four-year-old law that underpinned the FAFSA overhaul did not specify whether the same criteria should apply to dependent students. And until recently, no one noticed the oversight.
The Department of Education concluded on Tuesday that it would be “difficult to introduce floors”. [for dependent students] It would be against the provisions of the law. ” The department notified Congress of the plan on Monday night, but did not consult lawmakers about the decision, according to congressional aides.
Some House members say the decision means nearly 300,000 more students with higher incomes will become eligible for Pell, adding more financial pressure to an already strained grant program. Stated.
A measure was added to the Short-Term Expenditure Bill that would apply the same floor to dependents and independent students in the 2024-2025 award year and set a $0 floor for dependents each year thereafter. This was supported by House Republicans with support from some Democrats.
FAFSA helps students obtain qualifications Billions of dollars in federal, state, and educational funding for universities are in the midst of a chaotic update mandated by Congress. Policymakers passed bipartisan legislation that reduces the number of questions on the form and provides more free aid to more students. But this year's rollout has been plagued by delays, technical glitches and errors.
After initially failing to update the set of guidelines used to calculate financial aid eligibility, institutions Department officials said they are reviewing their methodology and statutes when processing the FAFSA. At that time, it was discovered that the law did not address the treatment of the income of students who depend on their families for support.
In 2023, 7 million students benefited from the $30 billion Pell Grant program. Founded in 1972, the program awards money that doesn't have to be repaid to students whose household incomes typically are $40,000 or less.
Pell's funds are being stretched to the limit due to higher maximums, more people returning to college, and increased eligibility through the revised FAFSA method. A bipartisan proposal to expand Pell's access to short-term programs could further strain the program. Senate Democratic aides said Mr. Pell will likely face a funding shortfall in 2025, even though he posted a $12 billion surplus last year.
Lawmakers were concerned that the department's action this week would create a $7 billion shortfall next year, only accelerating the budget deficit.
Rep. Virginia Foxx, R-N.C., chair of the House Education Committee, said in a statement that the provisions added to the short-term spending bill “stop the Department of Education’s reckless actions while also It will enable us to educate our students.” It's about getting the financial aid information you need in a timely manner to ensure future-proofing of Pell Grants to families in real need. ”
House Republicans say the measure will save an estimated $3.4 billion, which will be funneled back into Pell to help reduce the looming shortfall.
A recent analysis by the Committee for a Responsible Federal Budget projects that Pell's reserve fund will be depleted in 2026 or sooner due to increased and reduced discretionary spending. The think tank said the program faces a shortfall of $35 billion to $95 billion over 10 years, excluding current reserves. The analysis suggests that more money, fewer benefits, stricter qualifications, or some combination are needed to close the funding gap.
But restoring Pell benefits could undermine higher education's lukewarm recovery from the pandemic. Although Pell University's purchasing power has declined, it remains the largest source of federal grant funding and an important source of funding for low- and moderate-income students.
As a result, some Democratic lawmakers were outraged by the Education Department's reversal of the policy, lamenting that students would no longer be able to access Pell grants.
“In the richest country on earth, students who want a college degree can do so without facing financial ruin,” said Sen. Bernie Sanders (R-Vt.), chairman of the Senate Health, Education, and Labor Committee. You should be able to get your degree.” And pension.
He and Rep. Robert C. “Bobby” Scott of Virginia, the top Democrat on the House Education Committee, both said they were “very disappointed” with the outcome.
“It is a false choice to argue that we must choose between expanding Pell to more low-income students and preserving the long-term viability of the Pell Grant program. We can and should do that,” Scott said.
Despite the changes approved by lawmakers Thursday. Ministry of Education We estimate that an additional 1.5 million people will become eligible for up to Pell benefits and 610,000 people will become newly eligible for subsidies after updating their FAFSA.
