Monday, March 11, 2024

Storm clouds gather over Pell Grant funding outlook

Presented by Sallie Mae®: Delivered every Monday by 10 a.m., Weekly Education examines the latest news in education politics and policy.
Mar 11, 2024 View in browser
 
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By Michael Stratford

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Sallie Mae®

A LOOMING PELL GRANT FUNDING CLIFF? President Joe Biden this morning is set to roll out his annual budget request to Congress where he’ll again push to increase the Pell Grant — a key plank of the administration’s college affordability agenda.

— On the campaign trail in 2020, Biden promised to double the Pell Grant and his budget proposals since taking office have proposed a path to doing so over about a decade.

President Joe Biden delivers the State of the Union address with Vice President Kamala Harris and House Speaker Mike Johnson, R-La. looking on.

President Joe Biden called for continued increases to the Pell Grant program during his State of the Union address last week. | Shawn Thew/AP Photo

— “I want to make sure that college is more affordable,” Biden said during his State of the Union address last week. “Let’s continue increasing the Pell Grants to working- and middle-class families.”

So far, Biden has signed into law increases to the maximum Pell Grant totaling $900.

But Biden’s push to continue increasing the maximum Pell Grant award is about to run into a much different funding outlook in the coming months and years.

— An expected shortfall in the Pell Grant program in the coming year — or at least in the next few years — could send lawmakers scrambling to find new money to shore up the program and avoid benefit cuts, much less be able to debate further increases to the program.

— Congress for years has chipped in the same amount of annual discretionary funding into the Pell Grant program. But the costs of the program vary from year-to-year, depending in large part on how many students apply.

— For more than the past decade, Congress has funded the program in excess of the cost of providing Pell Grants, creating a surplus. Heading into the beginning of the 2024 fiscal year — last October — the Congressional Budget Office’s official estimate projected a $12 billion surplus in the program.

— The surplus in the program, as well as a separate stream of mandatory funding, has enabled Congress to continue to boost benefits for Pell Grant recipients in recent years — even as appropriators have level-funded the program in annual discretionary appropriations.

— The immediate funding issues for the Pell Grant program were averted to some degree by Congress’ decision two weeks ago to block a tweak to the new FAFSA formula that would’ve made more students eligible for Pell Grants. The continuing resolution that Congress passed last year included language that effectively reversed the expansion of Pell benefits to hundreds of thousands of students. Republicans said the move would have blown a $7 billion hole in the program’s budget.

— But outside forecasts and informal estimates circulating on the Hill suggest that even with last week’s changes, the surplus funding in the Pell program has largely evaporated and the program could be facing a shortfall as soon as this coming year.

The Committee for a Responsible Federal Budget estimated that the Pell program is facing a $35 billion to $95 billion ten-year shortfall and that reserves in the program “will be exhausted by 2026 or sooner.”

— Both Democratic and Republican aides tell Morning Education that they’re worried about a dwindling surplus in the program and expect they’ll have to act as soon as this coming fiscal year to avoid a shortfall in the coming year. One challenge for appropriators is finding money in the Labor-HHS-Education appropriations bill that is already constrained by the 2023 debt ceiling deal caps.

— Flashback: The last time the Pell Grant program faced a significant shortfall, lawmakers took a hatchet to federal student aid programs — nixing year-round Pell Grants, ending subsidized loans for graduate students, and ending a path to Pell funding for students without a high school diploma. Some of those benefits were restored in subsequent years though some cuts — including subsidies for graduate students — were made permanent.

— What to watch: Biden’s budget today will provide the administration’s projection of the status of Pell Grant program funding — and the depth of any shortfall in the program. That’ll be the first major hint at where Pell Grant funding is headed. But congressional appropriators will have to contend with the official estimate from the Congressional Budget Office that’s due out later this year.

IT’S MONDAY, MARCH 11. WELCOME TO MORNING EDUCATION. Please send tips and feedback to the POLITICO education team: Mackenzie Wilkes (mwilkes@politico.com), Juan Perez Jr. (jperez@politico.com) and Bianca Quilantan (bquilantan@politico.com). Follow us: @Morning_Edu and @POLITICOPro.

A message from Sallie Mae®:

Students and families borrow nearly $100 billion from the federal government to pay for college every year, but borrowing should never be the first option. We need to connect more students to scholarships and grants and simplify financial aid offer letters to limit overborrowing, and help families make informed decisions about paying for higher education. Learn about common sense reforms to the federal higher education financing system.

 
At the White House

BIDEN SIGNS FIRST TRANCHE OF FUNDING BILLS: Even as Biden today prepares to unveil his budget proposal for the 2025 fiscal year that begins Oct. 1, Congress is still working to finish up appropriations for the current 2024 fiscal year.

— Biden on Saturday signed a package of six funding bills. As Caitlin Emma and Jennifer Scholtes report, the minibus represented Congress’ first real success in funding the government more than five months into the fiscal year, which has been marked by repeated stopgap funding measures and chaotic negotiations amid House Republican infighting.

— Included in that measure was a GOP-pushed policy rider that aims to address concerns by conservatives that the Biden administration singled out parents who protested school polices during the pandemic. The bill bars DOJ from spending money “to target or investigate parents who peacefully protest at school board meetings and are not suspected of engaging in unlawful activity.”

— Next up: Congressional appropriators will now turn to finishing the remaining fiscal 2024 spending bills, including money for education programs, before stopgap funding expires on March 22.

 

DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The stakes are high as America's health care community strives to meet the evolving needs of patients and practitioners, adopt new technologies and navigate skeptical public attitudes toward science. Join POLITICO’s annual Health Care Summit on March 13 where we will discuss the future of medicine, including the latest in health tech, new drugs and brain treatments, diagnostics, health equity, workforce strains and more. REGISTER HERE.

 
 

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Higher Education

VIRGINIA BANS LEGACY ADMISSIONS AT PUBLIC UNIVERSITIES: Virginia Gov. Glenn Youngkin on Friday signed legislation that prohibits the state’s public colleges and universities from giving preferential treatment in admissions decisions to the children or other relatives of alumni or school donors.

— Youngkin’s approval of the legislation came after sailing through the state legislature earlier this year.

— Sens. Tim Kaine (D-Va.) and Todd Young (R-Ind.), who are pushing federal legislation to end legacy admissions, welcomed Virginia’s decision. “Now let’s build off this success and get our bill passed to end legacy and donor admissions preferences nationwide,” Kaine and Young said in a joint statement. “This will promote upward mobility and fairness in the admissions process”

 — Key context: Colorado in 2021 became the first state to ban legacy admissions at public colleges, while dozens of other individual institutions in recent years have scrapped the practice. Several other states, including Maryland, Massachusetts, New York and California, are considering laws that target legacy admissions.

— The Supreme Court’s decision striking down race-based affirmative action last summer has sparked more scrutiny of preferential treatment for legacy applicants.

— The Biden administration, including Education Secretary Miguel Cardona, have sought to encourage colleges to do away with legacy admissions. The Education Department’s Office for Civil Rights last year launched an investigation into whether Harvard’s legacy admissions practices violate federal civil rights laws.

— The Education Department released data last fall showing that nearly 600 colleges that receive federal funding give preferential treatment to the children of alumni.

 

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THIS WEEK ON THE HILL

THIS WEEK HOUSE HEARING ON STUDENT ATHLETES: The House education committee’s labor and higher education subcommittees this week will hold a joint hearing on “Safeguarding Student-Athletes from NLRB Misclassification.”

— The Tuesday hearing follows the Dartmouth men’s basketball team’s vote last week to become the first collegiate players union. The NLRB earlier this year green-lighted the union election for the team.

 

DON’T MISS AN IMPORTANT TALK ON ACCESS TO AFFORDABLE PRESCRIPTION DRUGS IN CA: Join POLITICO on March 19 to dive into the challenges of affordable prescription drugs accessibility across the state. While Washington continues to debate legislative action, POLITICO will explore the challenges unique to California, along with the potential pitfalls and solutions the CA Legislature must examine to address prescription drug affordability for its constituents. REGISTER HERE.

 
 
Syllabus

— Why you should stop texting your kids at school: The Associated Press.

— "You can hear a pin drop": The rise of super strict schools in England: The New York Times.

A message from Sallie Mae®:

Our federal higher education system is doing too much for too many and not enough for those who need the most support. Hundreds of millions of dollars in scholarships and grants go unclaimed each year with students and families instead turning to federal lending programs, some of which allow unlimited loan amounts that drive not only more federal student loan debt but also increase the cost of tuition. Read what education solutions company and responsible private lender Sallie Mae thinks about limiting overborrowing for higher education.

 
 

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Michael Stratford @mstratford

Bianca Quilantan @biancaquilan

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