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Pell Grants Defined & Updated for 2006


Pell Grants Are Need-Based Grants, Given to 5 Million College Students:

The Pell Grant Program is a need-based, undergraduate grant program funded by the federal government. Five million students, one-third of undergraduates, receive an average of $2,500 per year in Pell Grants to finance their education at accredited colleges or universities. Students do not pay back the grants. The maximum annual grant remains frozen at $4,050 for the 4th straight year.

How Do Students Qualify for Pell Grants? :

Students qualify for Pell Grants based on family financial need. More than 90% of families receiving Pell assistance earn less than $35,000 a year. Pell Grants are the main source of college financing for low-income families. Eligibility is determined by a complex tax return-related formula established by Congress and applied by the US Dep't of Education.

Pell Grants may be used at both two-year and four-year colleges.

Proposed Future Conditions for Pell Grants Eligibility:

In July 2005, the Progressive Policy Institute, a centrist Democratic group, proposed that only those who serve in the armed forces, the Peace Corps, AmeriCorps or similar public service may be eligible for Pell Grants.

Larger Pell Grants may be permitted to students who perform well academically in their first two years of college, and smaller grants to those who don't perform up to a standard.

Education Dept Tightens Pell Grant Eligibility :

In December 2004, without notice, the US Education Dep't "recalibrated" the formula used to determine Pell Grant eligibility. The change "makes it appear that families have more income available to pay college expenses than they do" per Terry Hartle of the American Council on Education. This change was then attached to a badly-needed spending bill, necessarily passed by Congress. This budget-saving move angered Democrats and education advocates.

Impact of Eligibility Change: 90,000 Students Lose Pell Grants:

The new Pell Grant eligibility formula will result in about 90,000 students nationwide being cut off from Pell Grants, with another 1.5 million students having their grants drastically reduced, by an average of $3,000. The cuts will primarily affect students whose families make $30,000 to $40,000 annually.

Indirect Impact of Pell Grants Eligibility Change :

By law, colleges and universities that receive federal funds are required to use the US Education Dept formula to also determine eligibility for their own financial aid programs. Thus, campuses will have to use the same recalibrated test of eligibility, and thus, will likely be unable to grant additional aid to assist students who experienced loss or reduction of Pell Grants.

The Politics of Pell Grants:

In his 2000 campaign for the Presidency, George Bush promised to raise Pell Grants for first-year students to $5,100. In the federal budget, the President raised maximum Pell Grant from $3,300 to $4,050 by 2002. In 2006, it remains frozen at $4,050 for the 4th consecutive year. There's a remote chance that it could be raised to $4,100 by Congress before the October start of the 2006 fiscal year.

The Future of the Pell Grant Program:

"I believe that the Pell Grant program is to higher education as Social Security is to the general population, and I don't believe Congress would ever let the program go bankrupt," says Rich Harpel of the National Association of State Universities & colleges.

In July 2005, the House Committee on Education finished an extensive two-year project to relook at all college grant and loans programs. The result was a 333-page legislative package, the Higher Education Act, passed by the House.

Memorable Quotes on Pell Grants:

"Pell Grants will become unavailable for 85,000 students...and another 1.2 million students will have their Pell Grant funding decreased. On the other hand, the bill appropriates $2 million to buy a presidential yacht." -- Howard Dean, Nov 29, 2004

"The Republican Congress just threw students who need Pell Grants...out into the cold." -- Senator John Corzine of New Jersey

"It would be shortsighted...to cut back on this (education) investment." -- Governor Rod Blagojevich of Illinois

New Pell Grant Changes for 2006:

Among changes to the Pell Grant program, commencing for the 2005-2006 federal year are:

- Grants will now be available year-round, rather than just during specified date periods.

- Previously, students who had been convicted of a drug offense were ineligible for Pell Grants. This was changed to only exclude students convicted of drug offenses while students.

- For schools' students to be eligible for Pell Grants, colleges must provide intellectual climates that support a wide range of views, and not permit professors to punish students who don't see eye-to-eye with them.

- More colleges will now be eligible for their students to receive Pell Grants, as a provision was eliminated from the Higher Education Act that barred federal financial aid programs being extended to schools that offer more than half of their courses online or via distance education.

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