Pell spending is down while number of participating students is up

by Grace

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Overall Pell Grant spending decreased last year even while the number of recipients increased.

The federal government spent $2.2 billion less on Pell Grants in the most recent fiscal year (which ended on July 1) compared to the previous year, according to newly released preliminary data from the U.S. Department of Education. That decrease, to $33.4 billion from $35.6 billion, fell well short of the department’s estimated $40 billion price tag for Pell.

The dip in spending also occurred while the number of Pell recipients increased by 58,000. That means more of the almost 9.7 million lower-income students who received the grants last year got smaller awards. One reason for that could be more students attending college part time, because part-time enrollment status reduces Pell award amounts.

Most of the decrease, $1.4 billion, may be attributed to the enrollment drop in for-profit institutions.

For-profit students’ average grant award is larger than that for students who attend community colleges, who are more likely to enroll on a part-time basis. So the flattening of Pell spending despite increasing numbers of recipients might be partially due to the for-profits’ woes, but experts said it was too early to make that call based on the new numbers.

Other spending shifts:

… Community colleges and public four-year institutions received slightly more in Pell revenue, while private colleges saw a small decline. The number of Pell recipients increased at public four-year and private colleges, while slightly fewer students at community colleges received the grants.

The July 2011 elimination of the year-round Pell Grant program, a three-year experiment that allowed students to receive extra funds for summer school, may have contributed to the lower overall spending.

Future Pell spending?

Republicans have proposed cutting the maximum Pell Grant amount by $845, a move opposed by Democrats.  General federal budget issues, including the impending “fiscal cliff”, may put pressure on all education spending next year.  Adding in fickle student participation patterns makes it hard to predict future Pell spending.

“We’re often surprised by what is happening to the Pell Grant Program,” Hartle said, noting that its “recipients are prone to making unpredictable decisions.”

One definite change that may affect future payments is the cut to the maximum eligibility period for Pell Grants from eight to six years that took effect starting with the 2012-13 school year.

Related:  A roundup of pending federal college financial aid changes (Cost of College)

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