Breaking News: CBO Says 2011 Pell Grant Costs Still Rising

Today the Congressional Budget Office released its Budget and Economic Outlook: Fiscal Years 2011 Through 2021 (aka the January 2011 Baseline) and delivered some bad news for the Pell Grant program.

Lawmakers, students and education advocates alike have been fixated on the fiscal year 2011 Pell Grant, which will cover the 2011-12 academic year. Congress hasn’t finalized any 2011 funding yet (programs are on temporary funding until March), so the Pell Grant for the upcoming school year is up in the air. What’s more, supplemental funding from the 2009 economic stimulus is all but gone, putting added pressure on the 2011 budget for the program. Adding to the uncertainty is the new Republican majority in the House of Representatives that has talked tough about cutting “non-security, domestic discretionary spending” to 2008 levels when Congress finalizes fiscal year 2011 appropriations.

According to the CBO, the funding goal posts for the 2011 program haven’t moved. The agency is going to use the estimates from last year (the 2010 baseline) to “score” the spending bill because that baseline technically applies to the 2011 grant. In other words, if Congress wants to maintain the maximum grant at $5,550 for the upcoming school year, the final 2011 appropriations bill needs to provide $23.2 billion – the number lawmakers have been aiming for since March of last year.  

But the technical loophole – using last year’s estimates – will mask a big upward revision in CBO’s estimates for the fiscal year 2011 grant. The new numbers out today show that the $23.2 billion won’t be enough to cover a maximum grant of $5,550 for all eligible students in the upcoming school year. In fact, the program will need another $5.0 billion on top of that for the fiscal year 2011 appropriation.

Since Congress is likely to take the easy out and fund the program using last year’s numbers, it will kick the extra $5.0 billion that the program needs for 2011 into the fiscal year 2012 appropriation, which Congress will take up as early as this spring.

So what’s the magic number lawmakers need to hit to maintain a maximum grant of $5,550 in the fiscal year 2012 appropriations bill? Are you sitting down? The Congressional Budget Office says it’s $37.8 billion.