Spending Package Restores Year-Round Pell, Cuts Pell Reserves

By Stephen Payne, Policy and Federal Relations Staff

In a move aimed at narrowly avoiding a government shutdown, congressional leaders early Monday morning released a tentative agreement on government spending for federal fiscal year (FY) 2017, which funds award year (AY) 2017-18 and includes the restoration of the “year-round Pell Grant,” and a cut to the Pell Grant program surplus.

Although the agreement includes the restoration of access to an additional Pell Grant award in an award year, also known as “year-round Pell,” and maintains the 2017-18 maximum Pell Grant of $5,920, it removes $1.56 billion in funding for the Pell Grant Program. This agreement must now pass through the House and Senate before heading to President Donald Trump for final passage.

The most significant action from Congress on higher education in some time, the restoration of year-round Pell comes after a variety of Republicans and Democrats, Speaker of the House Paul Ryan (R-WI), and Secretary of Education Betsy DeVos all expressed support for the concept over the past year.

As crafted in this bill, the potential restoration of year-round Pell, effective in AY 2017-18, will not include any “acceleration” component and will allow institutions to determine the assignment of crossover periods “as it determines is most beneficial to students.” These key provisions, repeatedly advocated for by NASFAA, should help to ensure that this restoration of year-round Pell will not be mired by an administratively burdensome implementation, as existed in the last short-lived iteration of year-round Pell a few years ago. Reinstating student access to two scheduled awards in an award year without an “acceleration” clause, and allowing institutions to determine assignment of crossover periods is a recommendation from NASFAA’s Reauthorization Task Force.

In the bill’s accompanying explanatory statement, the Department of Education (ED) is instructed to “implement this provision to maximize flexibility for institutions of higher education and avoid unnecessary administrative burdens while ensuring the best interests of students.” Further, ED is instructed to issue guidance on year-round Pell not later than July 1, 2017.

In the proposed restoration, a student would be limited to not more than one and one-half Pell Grants during a single award year and an additional award would be limited to students enrolled on at least a half-time basis. The additional award would count toward a student’s Pell Grant lifetime eligibility limit.

Sen. Roy Blunt (R-MO), chairman of the Senate appropriations subcommittee that funds ED, said in a statement that restoring the year-round Pell Grant is “a bipartisan, common-sense approach to making college more affordable for hardworking students in Missouri and across the nation.”

“By allowing full and part-time students to receive an additional Pell Grant during the year, often for a summer session, we’re helping them stay on track for graduation, enter or re-enter the workforce sooner, and graduate with less debt,” he said.

Likewise, Sen. Patty Murray (D-WA), the ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said in a statement that making Pell Grants available year-round was a move that “protected and expanded our investments in college affordability.”

While the legislative language sets up a sound structure for year-round Pell moving forward, the coming guidance from ED will be critical, as there remain some unanswered questions about the potential interpretation and implementation. At this point, it is unclear whether an institution could use this new authority as soon as this summer. Additionally, the language does not provide a waiver for negotiated rulemaking, meaning final rules on implementation could take some time to move through the regulatory process.

In terms of funding provisions in the bill, the spending package would remove $1.56 billion from the Pell Grant program, $1.3 billion of which comes from the Pell reserve fund, which now amounts to nearly $10.6 billion, according to the most recent estimate from the Congressional Budget Office. The other $254 million would come from a decrease to “mandatory” program funds for FY 2017, which were previously designated in the Higher Education Act (HEA). Because the program faced a funding shortfall as recently as a few years ago, any action to tinker with the financial strength of the program is unfortunate, particularly if used as a precedent in fiscal years moving forward. The $1.56 billion funding cut from Pell will not affect the already-announced maximum award of $5,920 for 2017-18.

It appears the Federal Work-Study (FWS) and the Federal Supplemental Educational Opportunity Grant (FSEOG) programs will maintain level funding again this year, the fourth straight year for FSEOG and the third straight for FWS.

Other provisions that may be of note in the bill for higher education observers include a one-year extension for the National Advisory Committee on Institutional Quality and Integrity (NACIQI), and a provision that allows borrowers who are consolidating their federal student loans to select their loan servicer.

NASFAA will continue to monitor the status of this spending package and, if passed, the ensuing work on implementation of the year-round Pell provision. The House is expected to vote on the bill on Wednesday, and the Senate could vote on Friday. The government will shut down if an agreement is not reached by midnight Friday. At this time, however, passage of this spending bill is expected due to the bipartisan nature of the negotiations.

NASFAA is in the process drafting a letter to ED outlining financial aid office priorities for the implementation of year-round Pell. Please submit questions or thoughts on implementation to policy@nasfaa.org to inform our advocacy.

Publication Date: 5/2/2017