Pell Grants: Budget delay could disrupt aid offers; report shows $3.75B in unclaimed aid

College financial aid offices are weighing the best path forward amid a Congressional stalemate over the 2022 federal budget, negotiations that could increase the maximum Pell Grant award. Legislators are debating a $400 increase to the Pell Grant, which would bring the maximum award to $6,895 for the 2022-23 academic year, The Washington Post reports.

In a survey conducted by the National Association of Student Financial Aid Administrators, around 60 percent of U.S. colleges and universities said they plan to send financial aid offers to incoming freshmen by the end of February. Others may choose to hold off on sending award information until federal appropriations are finalized.

Congressional budget delays have collided with the financial aid process many times before, but the Post notes that this uncertainty comes at a time when “higher education has a tenuous hold” on students contending with financial strain and basic needs insecurity.

Crucial to give an accurate picture of available aid

“It would be rare where a couple hundred dollars difference on an aid package would deter a student from going to college at all,” but every individual has a “breaking point,” Chuck Knepfle, vice president for enrollment management at Portland State University, told the Post. Knepfle added that, without an aid offer that shows the larger Pell Grant, students “on the margin of being able to afford college” could opt out without understanding that they will actually get more aid. Portland State—where nearly half of students are Pell-eligible—is proceeding with award offers but will make clear that Pell funding is an estimate until there’s a final federal budget.

Related: 10 hallmarks of a student-friendly financial aid offer >

Christina Tangalakis, associate dean of financial aid at California-based Glendale Community College, says that her institution has a later enrollment deadline and thus is waiting to issue award offers. Every dollar counts, she told the Post, noting that the influx of federal pandemic relief funds in the last couple years not only helped students but also “positioned [colleges] as this place where a student could get relief.” With that “dried up” and the Pell Grant clarity delayed, what does that mean for “a student who may have just begun to build trust in us?” Tangalakis asked.

$3.75B in Pell funds left ‘on the table’ in 2021

A new analysis from the National College Attainment Network (NCAN), meanwhile, drives home the implications when students don’t understand—or pursue—the financial aid available to them. NCAN estimates that 813,000 Pell Grant-eligible students graduating from U.S. high schools in 2021 did not fill out the Free Application for Federal Student Aid (FAFSA), meaning that, if all of them were destined for college, they left $3.75 billion in aid unclaimed, or an average of $4,477 per student.

Referencing a similar 2017 analysis, NCAN says that shows a 60 percent increase in the amount of unclaimed Pell Grants between 2017 and 2021. The jump stems in part from a slowdown in FAFSA submissions; just 53 percent of the Class of 2021 graduates completed the FAFSA by June 30, compared with 61 percent in 2017. The maximum Pell Grant also increased during that time-frame.

A call to increase FAFSA completion

Calling the Pell Grant “one of our best, and best targeted, tools to close the equity gap in postsecondary attainment,” NCAN CEO Kim Cook emphasized the importance of increasing FAFSA completion.

NCAN suggests that states could encourage FAFSA submissions by launching statewide challenges, sharing student-level data with schools, requiring students to complete the FAFSA in order to graduate, and providing counselors with the funding and training needed to guide students through the financial aid process. Schools, meanwhile, can host FAFSA completion events and provide families with educational resources.

Related: States pursue FAFSA mandates to encourage college enrollment >

“A huge part of it is the FAFSA is complicated, and students from all walks of life really need support to get through the process,” Traci Lanier, vice president of external affairs at 10,000 Degrees, a nonprofit college access organization, told NerdWallet.

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