More than nine million college students like these rely on the Pell Grant funds to pay for school, that’s money the federal government gives needy college students, which doesn’t have to be paid back. It’s considered to be the cornerstone of federal student aid. But some worry the Pell Grant Program could soon be tapped out. YNN's Geoff Bennett filed the following report.
UNITED STATES -- "Since the program guarantees aid to any student who meets the eligibility criteria, enrollment spikes threaten the Pell Program’s long-term fiscal viability. Pell is one of the federal government’s largest education expenditures, costing taxpayers about $30 billion a year," said Rep. Virginia Foxx, North Carolina.
A spike in enrollment, as the recession pushed more people to enroll in college to learn new skills and changes passed by Washington lawmakers allowed more students to get larger grant awards. Some 70 percent of Pell recipients now receive the maximum award, a little over $5,600 which doesn't go nearly as far as it used to.
"It now only covers about 35 percent of the cost of attendance at a four-year public school," said Justin Draeger, National Association of Student Financial Aid Administrators.
"Students still have unmet need of some $11,000 to pay for one year of higher education. They are filling that unmet need with loans, additional work, eating Ramen Noodles. The point is these students are living on the edge," said Michael Dannenberg Director of Higher Education and Education Finance Policy, Education Trust.
The education experts who testified Tuesday had varying opinions on how to make the Pell Grant program more effective and fix its projected funding gap. They suggested simplifying the application process, tightening eligibility requirements and holding colleges more accountable for the grant money.
Right now the rules are very loose. Once a student puts in 60 percent of a term, the school gets to keep 100 percent of the money," said Dannenberg.
And in a separate move Tuesday, the federal government said it would expand its oversight of companies that collect student loan payments, the company Sallie Mae being the biggest.
The Consumer Financial Protection Bureau is responding to complaints from borrowers about lost paperwork or processing errors.
Others have had trouble making prepayments on their loans, a federal student loan debt that now tops $1 trillion.
"Students who have the talent, desire and drive to pursue postsecondary education should be able to do so without being hindered by the inability to pay," Dannenberg went on to say.