CSU Office of Federal Relations

Debt Deal Preserves Pell Grants

August 4th, 2011

On August 2, President Obama signed into law S 365, the Budget Control Act of 2011, a complicated compromise package to raise the nation’s debt limit and reduce the deficit by cutting federal spending across a wide array of programs. 

Most importantly for universities like the CSU, which provide access to tens of thousands of low-income students, S 365 sets aside $17 billion to sustain the need-based Pell Grant program over the next two fiscal years ($10 billion in FY 2012, $7 billion for FY 2013). These dedicated resources will help alleviate a massive funding shortfall that posed a broad threat to current levels of Pell benefits, making it possible for Congress to both maintain the maximum Pell Grant at $5,550 and avoid cuts to student eligibility. It should also limit the damage to other education, research, and workforce training programs that could have faced cuts to help prop up Pell.  

This injection of new Pell funding was by no means assured. Over the past several months, Congressional leaders on both sides of the aisle, along with Obama administration officials and higher education associations, seriously examined options to cut down the size and scope of the Pell program beginning this fall. At times there appeared to be significant traction for proposals that could have been especially detrimental to CSU students, such as changing the definition of “full-time” students from the current 12 units to 15 units, which could have reduced by twenty-five percent grants for thousands of CSU students. Led by Chancellor Charles B. Reed, CSU leaders fought such proposals, making the case for full Pell preservation both within the higher education community and with policymakers on the Hill and in the Obama administration. In meetings, correspondence and briefings, Reed stressed the potentially devastating impact proposed cuts would have on working, first-generation, and underrepresented minority students – and on our nation’s ability to close the achievement gap and produce the job-ready graduates needed for future economic success. Students across the country, along with many other institutions and organizations, also rallied effectively on behalf of Pell, helping protect the program as a final deal on the debt was made.

The new Pell money in S 365 was made possible, however, by cuts to other higher education programs. The largest share comes through eliminating the subsidized student loan program for graduate and professional students (though S 365 explicitly preserves those benefits for students in California’s post-baccalaureate teacher-credentialing programs). Moreover, the deal puts a wide range of CSU priority programs, ranging from GEAR UP and TRIO to minority-serving to workforce training initiatives – in jeopardy for both near- and long-term cuts.

Enactment of S 365 enabled Congress to leave Washington for its traditional summer recess. The Senate plans to return on September 6, followed by the House on September 7.


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Last Updated: April 03, 2014