Myths and Misunderstandings: The Undeserved Legacy of Year-Round Pell Grants

By Elizabeth Blume

The Federal Education Budget Project at New America recently released a report analyzing six claims often cited as leading to the end of the Year-Round Pell Grant (YRPG). Authorized in the 2008 Higher Education Opportunity Act (HEOA), YRPG provided students with funding for summer course work to accelerate their time to graduation. The program ended two years after it started, due to an unexpectedly high cost; almost ten times greater than anticipated.

The YRPG continues to be of concern to policymakers as many of today’s higher education students attend school year round. Research shows that helping students take more courses with fewer breaks between semesters has the potential to increase graduation rates.

A breakdown and analysis of the six claims are below:

• Claim: Costs were unreasonable. Between 2007 and 2010, Pell eligibility was changed to increase the number of recipients and the amount of aid they could receive. With the enrollment surge caused by the recession, the number of recipients increased between 2007-2008 and 2010-2011 from 5.5 million to 9.3 million. Costs increased from $13 billion to $35.7 billion. Analysis shows that YRPGs accounted for only 5.9 percent of total Pell Grant costs in 2010-2011 and costs would still have increased nearly as much without the inclusion of the YRPG.

• Claim: Year-round Pell Grants were not supposed to cost anything. Some assumed that year-round Pell Grants would not impact the federal budget because students would earn their credentials faster. This is a misunderstanding of the way the federal budgeting process works. Analysis shows that adding YRPGs to the Pell Grant program increases the federal budget.

• Claim: The Department of Education’s implementation made the program more expensive. Lawmakers made “acceleration” a requirement for year-round Pell Grant eligibility but did not define it. In the final Department regulations, students were eligible for YRPG only if they attempted coursework that counted toward a second school year within a single year. Analysis shows that the Department regulations placed meaningful restrictions on eligibility.

• Claim: Year-round Pell grants did not encourage students to accelerate their timeline to graduation. Only one year of data was available from implementation to elimination of the policy. Analysis shows that there was insufficient time for research studies to be conducted on the rate of acceleration to graduation.

• Claim: Students could receive two full Pell grants in the span of three semesters- half of the maximum award in the first semester, half in the second and the full maximum amount in the third semester. Regular Pell Grants are disbursed by semester and based on credit load, as are YRPGs. Analysis shows that recipients are only eligible to receive up to half of a full year’s award for one summer semester of twelve credit hours.

• Claim: For-profit colleges abused the program. In the first and only year of YRPG implementation, all colleges had the flexibility to implement the program as they saw fit because the Department had not yet issued its regulations. Analysis shows that there is no evidence or analysis that for-profit colleges were laxer in their implementation than the later regulations allowed.

The report concludes that the unexpected cost of YRPG in 2010-2011 resulted from numerous eligibility changes that lawmakers made to the overall Pell Grant program and a substantial enrollment increase due to the economic recession and budgeting decisions.