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Amid Attacks on Pell Grants, Improper Payouts Fell 13 Percent in 2011


Proposed cuts to the Pell Grant program would leave up to 1 million students without critical financial aid for college.

CREDIT: Campus Progress Staff

Countless studies indicate that a college education leads to a well-paying job, so it would make sense that Congress—passionately committed to job creation—would prioritize making it easier for American to afford a college degree.

Unfortunately, it’s been just the opposite recently, with elected officials eyeing the Pell Grant program as it looks to find ways to cut government spending.  

In a bill for fiscal 2012, the House Appropriations Committee has proposed a number of cuts that total $3.6 billion and would strip up to 1 million students of Pell Grants that have been vital in helping them afford higher education. And due to changes in scoring rules by the House Budget Committee, legislators also need to create an additional $896 million in savings.

This draconian approach to the budget and education funding has wide support in the Republican Caucus. Rep. Denny Rehberg of Montana called Pell Grants “the welfare of the 21st century” and objected to the notion of helping students that he considers “people that don’t have to graduate from college.” It seems that he’s suggesting only some people should have the opportunity to go to college.

At an October town hall in Muskego, Wisc., House Budget Committee Chairman Paul Ryan  told a student that “he worked three jobs to pay off [his] student loans after college.” But with college tuition surging by almost 130 percent over the last 20 years and student loans set to exceed $1 trillion, that advice seems less relevant in today's economy. 

While the Republican Leadership in the House has repeatedly called for cutbacks in financial aid to college students, the White House has made efforts to expand it.  Last year President Obama signed legislation which reformed federal student loans by eliminating fees paid to private lenders.  By cutting out the middleman, the President achieved more than $60 billion in savings that will now be put directly into students’ pockets through Pell Grants. 

Rep. George Miller (D-Calif.), then-chairman of the House Education and Labor Committee, hailed the legislation as a victory for families and students across the country, praising it as an investment “in students and America’s world economic leadership.”

One of the critiques of the program, improper payments of Pell Grant funds, should be less of a worry now as such instances fell by 13 percent in 2011, according to the Office of Management and Budget. White House officials are crediting the reduction in error to a service introduced by the Department of Education in 2010 that retrieves income information on Federal Student Aid applicants directly from the Internal Revenue Service.

The error rate for Pell Grants fell to 2.7 percent this year from 3.1 percent in 2010—a modest decrease that will amount to about $300 million in savings.

“When the President and I launched the Campaign to Cut Waste we knew success would be measured by results, not rhetoric,” Vice-President Joe Biden said in a statement. “The sharp reduction in payment errors announced today demonstrates this Administration is serious about cutting waste.”

That's because while waste has been decreased for three consecutive years, the amount per student that the Pell Grant program can dole out has grown.

The National Association of Student Financial Aid Administrators also noted that the payment error rate for the Pell Grant program is lower than the 4.7 percent error rate for the rest of the government—and significantly lower than the 8.6 percent error rate for the Medicare fee-for-service program.

Pell Grant spending is projected to total $31.7 billion in award year 2012-2013. 

The Pell Grant program, named after Rhode Island senator Claiborne Pell, is a form of federal financial aid allotted to low-income students enrolled in undergraduate postsecondary education programs.

(Read More About Pell Grant Funding at Campus Progress.)

The White House credits the reductions in wasteful spending to the Campaign to Cut Waste, a project established by executive order to establish new oversight on government spending and accountability.

Jon Christian is a reporter with Campus Progress. Follow him on Twitter @Jon_Christian.

Abraham White is a communications associate at Campus Progress. Follow him on Twitter @abwhite7.

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