White House Eyes Pell Surplus Funds
April 3, 2017
When President Donald Trump published his FY18 budget request in mid-March, he asked for level funding of the Pell Grant Program. At the same time, however, the budget blueprint rescinded $3.9 billion from what is known as the "Pell surplus."
The Pell surplus—which currently stands at $10.6 billion—is the result of a strengthening economy after program costs were calculated. Those costs had increased significantly between 2008 and 2011. To cover the cost of running the program, Congress made changes to other Title IV programs, most notably the removal of the interest subsidy on graduate student loans and the 2011 elimination of year-round Pell, which had allowed students who accelerated their programs to receive more than one Pell Grant within an award year. Eventually, the economy recovered, and the program began running a surplus.
Many in the higher education community, including NACUBO, have advocated for using this surplus to restore the year-round Pell program. Several letters have been sent to congressional leadership, calling for the reinstatement of the popular program and arguing that the surplus funds should not be used for anything other than supporting and advancing Pell. Even if not used to fund year-round Pell, many argue that the surplus should remain in place to fund the program should there be a future surge in Pell recipients.
It is worth noting that presidential budget requests are just that: requests. Before Congress even approaches a FY18 budget, members must determine how they will fund the government for the rest of FY17. A temporary spending measure expires on April 28; lawmakers will have to decide if they want another continuing resolution to fund the government through October 1 or if they want to pass a FY17 budget.
In the case of the latter, Trump proposed in late March a $3 billion cut to ED for the remainder of FY17, $1.3 billion of which would come from cuts the Pell surplus. The balance of the FY17 ED cuts would come from K-12 programs.
It is unclear which approach Congress may take in funding the government for the rest of FY17, though continuing funding at current levels, perhaps with a slight across-the-board cut, is likely. Likewise, Washington gridlock could prevent lawmakers from passing a FY18 budget. One possible scenario for FY18 would have Congress again funding the government with small, blanket cuts to all federal programs.
Senior Policy Analyst