Looming Pell Grant crisis could reshape financial aid

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It’s been a nail-biting few years for Pell Grant advocates, as Congressional budget crisis after Congressional budget crisis raised the specter of deep cuts to the major federal financial aid program for low-income students.

But the next 18 months for the program may be among the most difficult yet. The Pell Grant is safe from the “fiscal cliff” — the combination of scheduled tax increases that go into effect in January, and mandatory spending cuts that take effect if Congress does not reach a long-term debt deal. But the 113th Congress, which takes office in January, will have to confront two other financial aid funding crunches in the next year and a half.

The challenges are particularly acute this time around. After the switch from bank-based lending to direct lending for federal student loans in 2010 redirected much of the savings to the Pell Grant program, it appeared to be on solid financial ground for the next few years. But increased concern about the deficit, which led to the narrowly averted government shutdown in spring 2011 and the fight over increasing the debt ceiling a few months later, led to cuts in an attempt to drive down the cost of the $37 billion program.

Full story: What’s Next for the Pell Grant?

Inside Higher Education