Congressman Russell Introduces Bill to Save Nearly $40 Million
Washington, DC – Last week, Congressman Steve Russell (OK-5) introduced H.R. 1767, a bill to discontinue the administrative cost allowances associated with Pell Grants. The Pell Grant was created by the Higher Education Act of 1965 in order to help students in need of financial aid attend institutions of higher education (IHEs). The Pell Grant program is well-known as it has helped millions of students attend college since its inception. What is not well-known about the program is that IHEs receive administrative funds for every Pell Grant recipient that attends their institution, and these funds amount to millions of dollars every year. Taxpayers should not have to pay institutions to take the grants.
The Department of Education pays participating IHEs an administrative cost allowance of $5 per enrolled Pell Grant recipient. The administrative cost allowance is for the purpose of administering benefits and, under certain circumstances, providing financial aid services to part-time students. The funds necessary to cover the administrative cost allowances are part of the annual discretionary appropriation for the Pell Grant program. In FY2016, the discretionary Pell Grant program appropriation was $22.5 billion, of which approximately $38.4 million was used for the administrative cost allowances alone.
Congressman Russell addressed the need to cut these allowances, stating, “Five dollars per enrolled Pell Grant recipient may seem like a pretty insignificant amount, but when you consider that the federal government will be giving out almost $40 million for this purpose you realize the amount of taxpayer dollars that are being spent. While I recognize that there is a cost involved in administering Pell Grants, this should be seen as the cost of doing business for participating IHEs. After all, students without Pell Grants provide no such fees. These institutions already benefit significantly from the Pell Grant program because it makes them far more affordable for students to attend. Taxpayers should not have to pay these schools to take Pell Grant money.”