Minimal Changes to Pell Grant are Met with Relief

Recent federal budget debates routinely include threats about slashing higher education freebies. But in the latest round of congressional compromising, the rhetoric produced only a few nibbles around the edges of financial aid.

On campuses across the nation, there were fears of a wholesale reduction in the Pell Grant program that is the single largest source of free money for low-income college students. More than one in four students receives one of these grants, worth up to $5,550 a year.

While Congress left the maximum award intact for the 2012-13 school year, it did tinker with some of the rules governing eligibility. And it is suspending a program that eliminated some of the interest charged on federal student loans. Those relatively minor changes, along with a few others, have left financial aid experts relieved as they enter the new year.

"I'm usually a person that's very skeptical, but this is not as bad as it could have been," said Faith Sandler, executive director of the Scholarship Foundation of St. Louis. "I think they're fairly reasonable."

Congress needed to plug a $1.3 billion gap in the Pell program, which has been growing for more than a decade as college enrollments have soared. There were 19.4 million applicants for the grants this year, compared with 9.5 million a decade earlier. Its annual price tag has risen from $10 billion in 2001 to an estimated $34.9 billion this year, according to the U.S. Department of Education.

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