Reduced Pell Grants for Distance Students? We Need Your Help.

Deep within an appropriations bill that was recently passed by the U.S. Senate Committee on Appropriations is a provision that could have a deep financial impact on the most cash-strapped undergraduate distance students.  The bill proposes to disallow counting the “room and board” costs and “personnel expenses” (such as a computer) as part of each student’s “cost of attendance” calculations for Pell Grant purposes.  These student costs would continue to be allowed for distance students seeking all other forms of financial aid.

If passed, students learning at a distance could receive smaller Pell grants than their on-campus or commuting counterparts.  It is hard to understand why the cost for a student’s living expenses are not allowable if the student takes online courses, but would be allowable if that same student were to commute to campus to take the same courses in a classroom.

This is unfair.  We need your help!

The Pell GrantTwo manicans fight over a $100 bill.

The Pell Grant “provides need-based grants to low-income undergraduate and certain postbaccalaureate students to promote access to postsecondary education.” The amount that a student receives depends on the student’s “financial need, costs to attend school, status as a full-time or part-time student, and plans to attend school for a full academic year or less.”

Unlike a loan, it does not have to be repaid.  Pell Grants have become the cornerstone of strategies to increase access to low-income students.

The Language

Currently, there is no discrimination by mode of instruction.  In the language for calculating a student’s “cost of attendance,” financial aid officers are directed to use the following criterion:

“(10) for a student receiving all or part of the student’s instruction by means of telecommunications technology, no distinction shall be made with respect to the mode of instruction in determining costs…”

The above language allows distant students to count some of their “room and board” and “miscellaneous personal expenses” as part of their costs.  In the Senate appropriations bill (S. 3295, beginning on page 125) that language is proposed to be changed to:

‘‘(10)(A) with respect to the determination of a student’s need for a Federal Pell Grant, in the case of a student who is receiving—

(i)                  all instruction (excluding limited periods in which the student is required to be physically present at the institution for noninstructional purposes, such as orientation or the administration of examinations) by means of telecommunications technology, only tuition and fees, books and supplies; or

(ii)                part of the student’s instruction by means of telecommunications technology, no distinction shall be made with respect to the mode of instruction in determining costs; and

(B) with respect to the determination of a student’s need for assistance under this title other than a Federal Pell Grant, in the case of a student who is receiving all or part of the student’s instruction by means of telecommunications technology, no distinction shall be made with respect to the mode of instruction in determining costs…’’

Subparagraph (i) above would remove “room and board” and “miscellaneous personnel expenses” (such as computers) from the list of costs that distant students could claim in applying for a Pell Grant.

Why are They Proposing This Change?

I don’t know.

I thought about stopping there, but figured you would not be satisfied with that answer.  Scott Groginsky (Legislative Assistant to Rep. Jared Polis, who co-chairs the Congressional Elearning Caucus), Jarret Cummings (Policy Specialist, Educause), and I discussed this issue earlier this week.  Some guesses:

  • To save money.  Given the state of the Federal budget that would make sense, but then on Monday came a notice about experiments to increase the pool of students eligible for Pell grants. If saving money is a goal, then cutting out students based on the mode of instruction is fairly arbitrary and discriminatory.
  • To address financial aid fraud.  The theory is that if less money were available to tempt criminals, then they would be dissuaded from committing fraud.  Such a move was suggested in a recent hearing on curtailing fraud, but this approach would punish more innocent people than criminals. It’s analogous to a bank stopping its online baking for all customers because a few used the internet to rob the bank.  Also, much of the fraud has involved loans.  To have a real impact on fraud, those aid categories would need similar restrictions on availability to distant students.
  • Conflating “online” education with “for-profit.”  We’ve seen this before.  They think they are just regulating “for-profit” institutions, but the rule would apply to all higher education sectors. And why would it be appropriate for “for-profit” institutions anyway?

At the end of the call, we came to one conclusion.  We don’t know.

The Bucket Problem:  A Regulatory Nightmare

The language seems to assume that students generally fall into easily identifiable buckets of: 1) receive all their instruction through telecommunications or 2) those that do not.  I’m not going to go into all the particulars here, but anyone in the elearning business knows that the use of telecommunicated instruction is more of a continuum than well-defined buckets.  Some faculty use technology 0% of the time in their class and some use it 100% of the time.  There are examples all along the spectrum in between.  Ultimately, wherever you drop the axe along that continuum is relatively arbitrary.

Further definitions will be needed to consign people to the “doesn’t count for Pell Grants” bucket.  Whatever those definitions are, people will easily find work-arounds.

Why Should We Care?  The G.I. Bill Had the Same Problem

In a version of the G.I. Bill passed a few years ago, veterans were not able to claim their housing allowance in determining the need for aid if they were taking only online courses.  In an update to the G.I. Bill, veterans are now allowed some, but not all, of their housing allowance. A January 2011 article in, it explained the change and the impact on students:

“Starting next fall, Post-9/11 GI Bill eligible veterans will be able to get a monthly living stipend without having to take traditional classroom courses. The stipend for online students will be significantly different from the traditional classroom student version. Online students will get half of the national average stipend (average Basic Allowance for Housing for an E-5 with Dependents). For example a full-time student who is taking 100 percent of his or her classes online will get $673.50 a month, while a full-time student taking at least one classroom course will get the full stipend rate based on the specific location of the school.”

“As a former online student, I can say that this is better than nothing. In fact, a school official told me that a large percentage of his students planned to drop their classroom courses and attend online only due to this change.”

Even with well-deserving veterans complaining, they were able to get only half of the allowance back.  Let’s learn from that lesson.

What Should You Do?

Contacting Senators and letting know your objection can’t hurt.  Of special interest would be if you are in a state with a member on the Senate Appropriations Committee.  Check to see if you have distance students who are receiving Pell Grants and ask them to contact their Senators.  Hearing from those most affected by the change usually has the greatest impact.  In your requests, ask Senators to remove the language from S.3295 that would disallow “room and board” and “miscellaneous personal expenses” in calculating Pell Grant “cost of attendance” for students studying completely online or through telecommunicated instruction.

Given that this is an election year and the inaction of Congress, this bill might not go anywhere, but let’s not be surprised and suffer from inaction.

We will keep you informed about any additional details we learn.

Thank you,


Russell Poulin
Deputy Director, Research & Analysis – WCET

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Photo credit:  Morgue File –

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Executive Director WCET (WICHE Cooperative for Educational Technologies)

8 thoughts on “Reduced Pell Grants for Distance Students? We Need Your Help.

  1. This issue was picked up by Inside Higher Ed in an article on July 13. Libby Nelson points to preventing financial aid fraud as the reason:

    Based on that article, Jarret Cummings of EDUCAUSE did some more research and posted this great piece on how it does not make sense to discriminate solely by mode of instruction in combating financial aid fraud. Nicely done:

    Jarret and I knew that this was one of several suggestions in an earlier report on fraud, but figured this move made no sense. This is especially true when the Department of Education is going to be examining the fraud issue in-depth in the coming months.

    Fire! Ready! Aim!

    We will continue to look into it.

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