Pell Grants Said to Face a Shortfall of $6 Billion

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.

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, said Terry W. Hartle, senior vice president for public affairs at the American Council on Education, which represents colleges and universities.

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.

“There are a lot of things going on — more people are applying for student aid, more people are going to college, more people who qualify for the aid are showing up at school,” said Thomas P. Skelly, the Department of Education’s director of budget service, who wrote a memorandum detailing the problem to Congress.

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.

This year, more than six million low-income college students will receive Pell Grants ranging from $431 to $4,731, federal officials said.

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.

“There may need to be an announcement in February 2009,” the memorandum warns, that Pell grants for the following academic year will be reduced.

“It’s the mother of all shortfalls,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “There’s more unmet need than anyone predicted.”

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.

“Without a Pell, I could never have even afforded the textbooks,” said Rita Gaglio, a 35-year-old mother of two who dropped out of high school, held several jobs she called “mediocre” and now uses her grant to study at Empire State College in Albany.

Rhonda Piedmonte, 43, is also a nontraditional student who counts on Pell Grants. She is studying Italian at the State University of New York at Binghamton because her income as a flight attendant fell sharply after the Sept. 11, 2001, terrorist attacks.

“The airlines have had problems, and the flight crews have had 60 percent cuts,” said Ms. Piedmonte, who will soon earn her bachelor’s degree. “I stuck it through till last year, then I just couldn’t do it any more, financially. I could never have gone back to school without a Pell Grant, and my financial hardship is so great that I’m getting other aid, too.”

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.

Many community colleges are experiencing record enrollments. At Onondaga Community College in Syracuse, for example, there are 3,006 first-year students this fall, the largest freshman class in its history, and Kristine Duffy, the associate vice president for enrollment services, said more students were enrolling full-time. In Florida, Palm Beach Community College has the biggest fall term for-credit enrollment in its 75-year history — more than 23,000 students, a 10 percent increase over last year.

“When the economy declines, our enrollment increases,” said Grace Truman, director of college relations. “When jobs are plentiful, that competes with students coming to school. But when they can’t find a job, or can’t get enough hours on their job, they take more classes.”

Still, rising tuition, shrinking state aid to colleges and the shaky economy are pushing college out of reach for many low-income students. Although Congress increased the size of the Pell Grants last year, the portion of college costs they cover has been declining. According to the College Board, the maximum grant covered half a year’s study at the average public four-year college in 1987-8, but last year, it only covered about a third.

This fall, many community colleges are enrolling students who had planned to attend more expensive four-year public or private colleges, but as the economy worsened chose a less expensive alternative.

“People are feeling pinched,” said Melissa Gregory, director of student financial aid at Montgomery College in Rockville, Md., who this month has worked with new students who originally planned to attend the University of Maryland, American University, George Washington University and others. “These are students who had good aid packages, but there were a lot of loans in there, and at this point, people don’t want to take out loans.”

With tuition at Montgomery running about $3,900 for county residents, she said, many students with maximum grants can cover their tuition and still have money left for books.

“This is the college I can afford now,” said Sharmistha Chowdhury, 19, who emigrated from Bangladesh to study in the United States and hopes to be a lawyer. “I’m really grateful for the Pell. Because I’m a woman, it’s hard to do something in Bangladesh, so I decided to come here to be on my own, to be an independent girl.”

The very popularity of Pell Grants may insulate them from cuts.

“If it is threatened, you’ll hear about it,” said Edward M. Elmendorf, senior vice president of the American Association of State Colleges and Universities. “The decibel level will be deafening.”

After the Department of Education briefed the House Education and Labor Committee on the problem, Rachel Racusen, the committee’s spokeswoman, said its chairman, Representative George Miller, Democrat of California, was “committed to ensuring that the scholarship doesn’t decrease in the future.”