Stimulus package will increase Pell funding

If language remains in bill, record-level grants would take pressure off aid office

By Alison Sider

Following his inaugural pledge to “lay a new foundation for growth,” President Barack Obama’s American Recovery and Reinvestment Act includes substantial funding for student loan initiatives widely used by University of Chicago students.

The $819 billion economic stimulus package, passed by the House in a vote of 244 to 188 last Wednesday, includes $15 billion to bolster the struggling Pell Grant program. If passed by the Senate, stimulus funding would bring the maximum yearly award to its highest level ever—$5,350 by next September and $5,550 for 2010.

Pell Grants, which are given by the federal government and do not have to be repaid, are a significant source of funding for U of C students. According to Alicia Reyes, director of college aid, an anticipated 629 College students will receive about $2.1 million in aid through Pell Grants this year.

During the 2006–2007 academic year, 11.4 percent of U of C undergraduates received Pell Grants, compared to 8.1 percent at Harvard, 8.8 percent at Northwestern, and 9.6 percent at Yale.

The University has taken an active interest in the stimulus bill’s development, according to Scott Sudduth, associate vice president for federal relations. “The University supports the recommended increase in Pell Grant funding,” Sudduth said. “We’ve been talking to the Illinois delegation, making the case that this is an important component for accessibility for students.”

Bumping up the grant level will likely alleviate some pressure on the University’s financial aid office. Higher grant awards could mean that the University foots less of the bill. According to Reyes, when Pell Grants and other federal funding fall short of demonstrated need, the University often makes up the difference.

But Reyes pointed out that even if larger Pell Grant awards decrease reliance on University funding, there may still be elevated demand for financial aid. As unemployment rises and more students become eligible for financial aid, there may not be much left over for other projects.

Though the University’s endowment has lost an estimated 25 percent of its value, Provost Thomas Rosenbaum pledged the University’s commitment to maintaining financial aid, even as academic and administrative budgets are cut. “We will not decrease the financial aid packages for individual students, and in some cases those packages may be increased, if individual circumstances warrant it,” Rosenbaum wrote in an e-mail to students and faculty last month.

But it’s not clear yet that the Pell Grant funding will be part of the final version of the stimulus package when it is eventually passed. Many Senate Republicans and even some Democrats have criticized the broadness of the stimulus plan, arguing that funds now allocated for education and health care would be better spent on infrastructure and other projects that will get people back to work more immediately.

“You don’t want to be against Pell Grants,” Senator Ben Nelson (D-NE) said in an interview with Fox News. “But the question is, how many people go to work on Pell Grants? Should it be in this legislation?”

Even those who favor the Pell Grant increases might prefer to see it dealt with separately from the stimulus package. “It’s not really a question of the Pell Grant program per se, but…of how much can they stomach in one comprehensive stimulus package,” Sudduth said.

But the University and other educational institutions argue that programs like Pell Grants—programs that make it feasible for many students to attend college—will create an educated and highly skilled work force that will stimulate the economy in the long term. “The U of C, with the broader higher education community, is encouraging the Senate to take the long view,” Sudduth said.

Sudduth is optimistic that the Pell Grant provisions are popular enough to make the final cut. “If it were not perceived to be anti-student or anti-helping-the-middle class with the affordability of college, many members would say no, this should not be part of the stimulus,” he said. ”But I think that the politics are such that members will probably opt to include this in the stimulus.”