CSU Office of Federal Relations

Reconciliation Bill Boosts Pell Program

April 6th, 2010

President Obama signed HR 4872, the Health Care and Education Reconciliation Act of 2010, into law on March 30. HR 4872 includes a major boost to Pell Grant funding over the next decade. It increases the maximum Pell Grant award from its previous cap of $5,350 to $5,550 for the 2010-13 academic years. (In addition, the bill sets aside $13.5 billion to avoid a major reduction in Pell funding for the upcoming year by alleviating a massive shortfall caused by increased demand.) Then, starting in fall 2013, the maximum Pell Grant is set to increase annually at the same rate as the cost of living, by being indexed to the Consumer Price Index (CPI). This approach is projected to lead to a maximum grant of $5,975 by 2017, after which the CPI indexing expires. However, the annual increases are contingent upon several variables, and greater increases – or even reductions – remain possible. The bill also:

  • continues through fiscal year 2019 supplementary funding to minority-serving institutions, including Hispanic-Serving Institutions (HSIs), to support students in Science, Technology, Engineering and Mathematics (STEM) fields;   
  • provides $750 million over five years for the College Access Challenge Grant program – formula funding to states for innovative partnerships to bolster college preparation and success, and financial literacy; 
  • broadens the benefits of the Income Based Repayment (IBR) program, which permits lower-income wage earners to reduce their student loan payments; 
  • includes $2 billion for community colleges to develop and improve educational or career training programs over the next four years.   

The legislation funds all of these items by ending the Federal Family Education Loan (FFEL) program, which provided subsidies to banks for making government-backed loans to students. Beginning this summer, all new federal student loans will be made by the federal government through the Direct Loan (DL) program, which will continue to use private contractors for loan servicing and collection.

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Last Updated: May 08, 2015