License to Thrive

"All Pell Breaking Loose"

Battered by a worsening economy, college students are seeking federal financial aid in record numbers this year, leading Bush administration officials to warn Congress that the most important federal aid program, Pell Grants, may need up to $6 billion in additional taxpayer funds next year.

Estimates by the Department of Education suggest that the new president will face an unusually burdensome financing shortfall or the fallout that would accompany trimming the nation’s leading college aid program.  Congress appropriated $14 billion for the grants for the current fiscal year, but because of the increase and because of accumulated shortfalls from previous years, lawmakers will need to add $6 billion in new funds next year or cut the size of the grants, Department of Education officials said.

As of July 31, 800,000 more students had applied for grants than on that date last year, according to the memorandum, which called the increase one of the largest ever year to year.  Driving the increased applications for federal aid, in part, have been nontraditional students returning to school to improve their job skills during the economic downturn

This year, more than six million low-income college students will receive Pell Grants ranging from $431 to $4,731, federal officials said.  The Pell Grant, created in 1972, has long been the most important form of aid to needy students, and for millions, whether recent high school graduates or those who have been working for years, higher education would be impossible without such aid

While the grants are only available to the most needy students — 9 out of 10 recipients have family incomes of $40,000 or less — the number of students seeking all kinds of federal aid is growing rapidly. In the first six months of 2008, almost nine million students nationwide completed the federal aid application required for federal grants and loans, a 16 percent increase over last year.  This fall, many community colleges are experiencing record enrollments due to students who had planned to attend more expensive four-year public or private colleges, but as the economy worsened chose a less expensive alternative.