Did Republicans Just Cut the Pell Grant?

If a budgeting gimmick worked once, you can count on lawmakers to try it again the following year. Witness what is happening to the Pell Grant program in the pending 2016 House appropriations bill.

House Republicans are doing what Senate Democrats did last year to the Pell Grant program. They would cut the appropriation by $370 million and use more of the program’s surplus funding -- customarily reserved for a future year -- in the current year. Last year’s cut and the one pending in the House would take the annual appropriation for Pell Grants from $22.8 billion in 2014 to $22.1 billion in 2016. (The pending Senate bill would hold funding at the 2015 level.)

The trick here is that the appropriation goes down compared to the prior year but the maximum grant offered to individual students still goes up, thanks to the surplus. The maximum grant would increase a little less than $100 to $5,865. In some not-too-distant year, however, lawmakers will need to boost funding more than they otherwise would to make up for this gimmick.

Maybe that year will never come. If only. Pell Grant enrollment is set to rise, not fall, every year.

Lawmakers and others in the policy community have been lulled into a sense of complacency about Pell Grant funding. Indeed, the program has enjoyed funding surpluses for several years thanks to lower-than-expected costs, extra funding lawmakers provided in 2010 and 2011, and tightened eligibility rules.

But the surplus is shrinking, not growing. It is after all a fixed amount of money that lawmakers dip into every year. It’s shrunk from $9.4 billion a few years ago to $5.5 billion today. Information from the Congressional Budget Office shows that funding surpluses will last only one more year after the pending 2016 appropriation. It might last a little longer if fewer people enroll in school, but that's hardly something to wish for.

To keep the program going in it's current state -- including annual inflationary increases to the maximum grant -- lawmakers need to provide $73.8 billion in additional funding over a 10 year budget window (technically over eight years since the first two rely on surpluses). Under the House bill, that number increases to $77.5 billion.

Now is not the time to be complacent about the fiscal health of the Pell Grant program. And it is certainly not the time to cut the appropriation."