The Impact of the New Pell Grant Restrictions on Community Colleges: A Three State Study of Alabama, Arkansas and Mississippi

A new study by the Education Policy Center at the University of Alabama finds that enrollment at community colleges in Alabama, Arkansas, and Mississippi declined significantly in the fall of 2012 due to recent changes made to Pell eligibility. The report’s authors argue the eligibility changes caused thousands of students to lose Pell grants and they predict many more thousands will lose their Pell grant funding in the coming year. Using data from the U.S. Department of Education and survey results from financial aid administers at all 63 of Alabama’s, Arkansas’ and Mississippi’s community colleges, the report argues that students in these three states are particularly sensitive to changes in  Pell eligibility criteria and that reductions in Pell aid as a result of such eligibility changes adversely affect students’ academic futures.

Among the report’s findings:

• It is estimated that two out of every three full-time students receive Pell grants in Alabama, Arkansas, and Mississippi, indicating their importance to higher education access for students in the Deep South.
• Declining community college enrollment, the authors argue, is a direct effect of the 2012 changes to Pell eligibility which included (1) reducing the maximum time a student is Pell-eligible from 18 total semesters of full-time enrollment to 12 total semesters; (2) lowering the income threshold for receiving an automatic zero expected family contribution from $32,000 to $23,000; and (3) restricting students without a high school diploma or GED from receiving a Pell grant.
  • These changes were enacted to address rapidly rising costs associated with the Pell program resulting from more generous eligibility criteria in prior federal higher education legislation and a substantial increase in the number of Pell applicants and recipients during the recession.
• Enrollment declined at more than 75% of two-year colleges in Alabama, Arkansas, and Mississippi in the fall of 2012.
• Over 5,000 students in these three states lost their Pell grants in the fall of 2012 and nearly 17,000 are estimated to lose their Pell grant in 2013.
• Before these changes in Pell eligibility, community colleges in the Deep South saw an across-the-board 6% rise in enrollment from 2008-2011 due an increase in the number of students who qualified for a Pell grant.
• Survey results from financial aid administrators at all 63 community colleges in the Deep South indicate:
  • Most administrators favor lowering the maximum Pell award if it would mean fewer student eligibility restrictions and regulations on how it can be used.
  • A large majority view the now-defunct year-round Pell grant program as an effective tool to increase student completion at their institutions.
  • Overall, administrators of financial aid would like to see a phased-in implementation of the new time limits for Pell eligibility to mitigate the negative impact on students.