Obama to cut individual Pells amid exploding growth

Mon Feb 14, 2011 11:42am EST

* Year-round Pell is suspended

* Analyst says for-profit students likely recipients

WASHINGTON Feb 14 (Reuters) - President Barack Obama's proposed budget for the next fiscal year nips and tucks at individual grants for low-income students but the amount budgeted is twice as high as two years ago because the number of students has grown.

One tuck is a decision to end the year-round Pell which allows students to collect two grants in a calendar year if they attend summer school, which is most likely to be felt by for-profit schools, according to one analyst.

The other tuck is the elimination of interest subsidies for loans to graduate students.

The maximum award for a Pell grant remains $5,550, which more than nine million students expected to benefit from as part of the program. That's up from 5.6 million students who received Pell grants in the 2008-2009 academic year, said Mark Kantrowitz, a financial aid expert.

"Cutting the year round Pell grant does affect the (for-profit) colleges because they're the most likely to take advantage of it," said Kantrowitz.

The department said in its budget that the year-round program "has cost 10 times more than anticipated and failed to demonstrate a meaningful impact on students' academic progress."

The Education Department budget allotted $36.3 billion for federal Pell grants for the 2012 fiscal year, up from $17.5 billion in 2010.

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