Pell Grant Changes

President Obama came into office with about 6.1 million students receiving the Pell Grant, with a total annual disbursement of roughly $18 billion. In the intervening years, the maximum annual grant amount has gradually increased, and eligibility requirements have tightened. Discussions have remained focused on maintaining the core program objectives in an era of budget restraint.

Each Pell Grant approved by the U.S Department of Education applies to a 12-month period measured from July 1 to June 30. The maximum annual grant amount was $4,731 at the time of the president’s 2008 election. The American Recovery and Reinvestment Act, also known as the stimulus bill, raised the amount to $5,350 in 2010. After the next two years at $5,550, the grant limit is now at $5,635.

The Free Application For Federal Student Aid is required to start the grant process. The FAFSA application provides financial information about the student or the student’s parents in order to formulate the expected family contribution, if any. The EFC expectation can reduce the amount of net grant proceeds, and was set at a maximum of $4,617 by the stimulus bill. Maximum EFC went up to 5,273 for 2010 and 2011, followed by a drop to $4,995 in 2012. For eligible students with grants reduced by the EFC adjustment, the minimum amount receivable increased from $555 in 2011 to $577 in 2012.

The most sweeping legislation enacted in recent years affecting the Pell Grant was the Consolidated Appropriations Act, signed into law by President Obama in December 2011. Certain full-time students in accelerated programs had been able to receive two Pell Grants over a time period of twelve months. It was acknowledged that the estimated $8 billion cost for the year-round program was not achieving the desired results, and that a more important objective should be to maintain the existing levels of routine grants.

A more significant change brought about by the same appropriations bill was to reduce the number of semesters for which a student could receive the grant. The duration of eligibility for the grant had previously been the equivalent of 18 full-time semesters. The duration was cut by a third, to the equivalent of 12 full-time semesters. The change was retroactive, leaving some students in the lurch, finding themselves suddenly over the 12-semester limit.

An economy in recession, with fewer jobs, has created more students eligible for assistance. There were 9.1 million Pell grant recipients in fiscal year 2011, and 9.7 million recipients in fiscal year 2012. Total grants are roughly $36 billion annually and provide assistance to over one-third of baccalaureate students.