The Debt Deal: Issue by Issue

Education

The debt-ceiling deal includes $17 billion for Pell Grants for fiscal 2012 and 2013, which puts it several billion dollars short of what will be needed to give everyone who is eligible the $5,500 per year benefit that helps them pay for college. The Pell Grant provision marks the beginning of a fight between budget hawks and education gurus who insist that Pell Grants are the last place to cut costs if the United States hopes to remain competitive in the global market. It could get nasty. The regular appropriations process is just beginning.
Under the debt deal, Washington Research Group analyst Teddy Downey estimates, the Pell Grant shortfall over the next two years would be just under $3 billion if the annual congressional appropriation for 2012 and 2013 remain stable. But that’s a big if. Keeping Pell Grants funded at their current rate could cost upward of $20 billion for 2012 alone, and there is no guarantee that Congress is feeling generous with its purse strings.

House Budget Committee Chairman Paul Ryan, R-Wis., has called for drastic cuts in Pell Grants to “pre-stimulus” levels, which could more than halve the money available. The debt deal negotiated by House Speaker John Boehner and the White House doesn’t go nearly that far, but Ryan’s sentiment that the Pell Grant program is on an “unsustainable path” isn’t likely to die.

Rank-and-file House Republicans were whining about the Pell Grant provisions in several drafts of the debt deal last week.

The cost of the Pell Grant program has escalated in the past two years because the population of eligible recipients has swelled from 6.2 million to 9.4 million, according to the Education Department. Almost three-fourths of the administration’s requested budget increase for education is designated to meet those Pell Grant needs.