If Congress trims the Federal Pell Grant Program, which supports many Yalies financially, the University will need to increase its financial aid budget in the coming years.
The program, which provides need-based grants to low-income undergraduate and some postbaccalaureate students, has experienced eight years of shortfalls over the past decade — including a $10.7 billion budget gap this year — prompting Congress to consider how to reform the program and reduce its spending, The Chronicle of Higher Education reported March 20. Yale administrators said any cuts to Pell Grants would have a large impact on the University’s finances, since Yale would attempt to make up the difference for students who depend on the Program.
“When we [determine a student’s financial aid package] we first take outside scholarships into account,” Director of Financial Aid Caesar Storlazzi said. “They go in first, then Yale comes in and fills the gap. If Congress cuts back on Pell Grants, the University will make every effort to cover the resulting gap in funding for all Pell Grant recipients receiving financial aid from Yale.”
According to data from the Office of Institutional Research, 766 students are receiving the grants for the 2010-2011 academic year – 14.13 percent of the student body based on fall semester enrollment statistics. Overall, Storlazzi said, Pell grants account for approximately $3 million dollars of Yale tuition this academic year.
He added that it is too early to comment on where the University would find the funds to cover any reduction in Pell Grants.
“A cutback on Pells at the federal level would certainly affect Yale’s overall finances,” Dean of Undergraduate Admissions Jeffrey Brenzel said in an e-mail. “However, this would not directly affect lower income families here unless Yale at some point changed its current financial aid policies.”
There are currently two proposals under consideration to reform the Pell Grant Program. One was proposed by Republicans in the House of Representatives, and would cut $5.7 billion from the program’s budget by eliminating aid for the quarter of current recipients with the least need and reducing the average award by $785, according to the Chronicle. This bill passed the House last month and is currently being debated in the Senate.
President Barack Obama formulated the other proposal, which would discontinue the year-round grants that enable students to receive two grants each year to pay for accelerated degree programs, said Mark Kantrowitz, publisher of FinAid.org and Fastweb.com, two websites focused on college financial aid. Obama’s proposal would cut the program’s costs by $8 billion, he added.
Though in the short run, streamlining the Pell Grant program may be enough to erase the shortfall, a long-term solution may involve serious structural alterations to the program, such as cuts to aid for wealthier recipients, reversals of recent expansions of the program and new achievement expectations for students receiving grants, the Chronicle reported.
Storlazzi said he and the financial aid community were disappointed to learn that the maximum Pell Grant award may drop from its current level of $5,550 to the $4,000 range next year.
Two Yale students on Pell Grant funding interviewed said they were more concerned about what would happen to students at public universities than students if the Pell were cut than about students at places like Yale, since schools with smaller endowments may not offer alternative financial aid options the way Yale does.
“If the Pell Grant were reduced, Yale would most likely cover the gap,” said Carissa Youse ’13, who receives a Pell Grant. “If I did have to pay the difference, I would have to take out loans … I already have to work two jobs to pay the little bit of money that I have to pay Yale.”
Kantrowitz said cuts to the Pell Grant Program would not hurt Yale significantly.
“Relative to Yale’s financial aid budget it’s [a small amount], but any cut hurts,” he said, adding that “the Pell Grant is such an essential program that it’s really strange that Congress is considering cutting it as opposed to something less essential.”
The Pell Grant Program was created in 1972, known at that time as the Basic Opportunity Grant Program. It was intended to serve as the “floor” of undergraduates’ financial aid package, in order to combat the disparity of funding among different institutions.