I asked my friend Ben Miller, a program associate at the New America Foundation, to weigh in on the somewhat-obscure but terribly-important changes that Obama is proposing to the Pell Grant program. He kindly did so. What follows comes from him. Pell grant's currently occupy a weird space where they are an entitlement, but are funded through the discretionary process. In other words, each year Congress says they want to provide enough funding for students to receive a grant at a specific level (currently $4,731), but they then have to guess how much money to provide through the appropriations process to get that amount using take-up estimates and other information. Not surprisingly, the guesses are often fairly off the mark. But since the Pell Grant is guaranteed for all those who qualify, they will end up spending whatever it takes to get all recipients the grant level they're qualified to receive. As a result, you often get shortfalls within the program that can amount to several billion dollars. These have to be paid off the next year, forcing appropriators to redirect funds from elsewhere in order to stay beneath their budget caps.
