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Financial Aid in the News: Obama Plans Changes for Pell Grant

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President Obama’s budget plan calls for a number of sweeping changes for federal student aid, from student loans to state grants to education tax credits. It also proposes to big adjustments in the Federal Pell Grant Program.

The Pell provides need-based grants to low-income students. While the amount of the grant is set each year by the Congress, the Pell Program is often criticized for not providing enough aid to keep up with the rising costs of higher education.

If President Obama passes his budget, however, the Pell Grant Program will be transformed into an entitlement program that grows every year to keep pace with inflation. Just like Social Security and Medicare, Pell Grants would no longer be dependent on Congressional approval for rate increases. Instead, low-income students would be guaranteed an inflationary bump every year. While it may still not be enough to keep pace with skyrocketing tuition hikes, it will certainly help.

To get a better overall picture of the higher education in the Obama budget, see this February article from Inside Higher Ed. And you can learn more about the proposed changes to student loans from the Financial Aid Finder two weeks ago.

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