Congress is again adding hundreds of millions of new dollars to the Pell Grant program for low-income college students, but it's also allowing a procedural change that would cut -- and in some cases eliminate -- grant eligibility for as many as 1 million students.
The spending bill passed by Congress last weekend increases funding for Pell Grants, the main federal form of college aid for poor students, by $458 million to about $12.4 billion, though that figure could be ultimately trimmed back slightly.
Like other boosts to the Pell program in recent years, this one will be devoured entirely by increased demand. And the maximum grant will be frozen at $4,050, despite sharp increases in college costs.
The grant amounts aren't growing because more people are seeking them. The number of students receiving Pell Grants has increased 37 percent in the last decade to more than 5 million, according to the College Board, which owns the SAT exam.
Meanwhile, Congress declined last weekend to block the Education Department from updating tax deduction tables used to calculate aid eligibility -- a move that angered Democrats and some higher education advocates.
If the Education Department updates the tables, it would cause about 1 million prospective Pell Grant recipients to have their eligibility reduced by an average of $300, according to Brian Fitzgerald, staff director of the Advisory Committee on Financial Assistance, which advises Congress. The update would save the Pell program about $300 million annually.
The impact would be felt largely by students from families earning between $35,000 and $40,000, Fitzgerald said. Poorer families don't generally benefit from the deductions, and more wealthy ones don't typically qualify for Pells.
About 84,000 students eligible for some award under the previous guidelines would get nothing, Fitzgerald said.
The tables used to calculate awards are still based on IRS state income tax rate data from 1988, when rates in many states were higher than they are now. If the tables are updated, they will show many applicants paying less in state taxes, and the federal government will expect them to contribute more of their own college costs.
The Education Department is required by law to update the tax tables (the 2001 IRS data is now the most recent available) and was set to do so last year until Congress blocked the change. Democrats and education lobbyists had expected Congress to block the update again, but Saturday's bill included no such language.
Now, Democrats say, Pell Grant applicants are being hit twice: Families are paying higher state taxes, since rates have gone up since 2001, but they won't get credit for it when applying for Pell Grants.
"The Republican Congress just threw students who need Pell Grants to afford a college education out into the cold," said Sen. John Corzine, D-N.J.