The Pathways to an Affordable Education Act, introduced by Rep. Derek Kilmer (D-WA), would amend the federal Higher Education Act (HEA) to increase financial aid funding and access, helping today’s non-traditional students—particularly those who are low-income—earn the postsecondary credentials that are a crucial pathway out of poverty. In academic year 2013-2014, the average income of all Pell Grant recipients was $21,200; for independent students without dependents it was only $8,400. As college costs and student unmet need continue to rise, bridging the gap between higher education costs and student resources requires giving students better information about what aid is available, making financial aid flexibly accessible as students attend college over time, and ensuring that the aid keeps up with rising costs. The bill would address these issues by:

• Providing stable funding and automatic increases so Pell Grants keep up with rising expenses. The bill authorizes the Pell Grant program to be funded through the mandatory part of the federal budget—so that Pell funding would no longer be subject to annual appropriations—and also increases the maximum Pell award from its current level of $5,775 to $9,139 (equal to the average cost of attending a public, four-year institution in-state) and indexes Pell Grant amounts in future years to the Consumer Price Index.
• Improving the accuracy of the Expected Family Contribution (EFC) calculation. The most recent Department of Education estimate of the average cost of attendance for students attending two-year public institutions is $13,579. For students whose EFC shows that they do not have personal or family funds to put toward their education or training, this bill would cover the difference between the maximum Pell award and this amount. This provision would make a significant investment to mitigate the serious issue of student unmet need.
• Removing the tax penalty for Pell Grant recipients by requiring the full grant amount not be treated as taxable income. Currently, when students use their Pell Grant funds for indirect costs of attendance, such as housing, food, or transportation, this portion of the grant is counted as taxable income. Pell Grants are the foundation of all student financial aid and are meant to support students in pursuing higher education; students should not face a tax penalty for spending these funds on legitimate, recognized costs of college attendance.
• Improving the alignment of Pell Grants with students’ schedules and existing federal rules. This bill proposes allowing students to receive Pell Grants year-round, so that they may accelerate their studies and complete sooner. It also would allow students to receive grants for a longer time—up to a maximum of 15 semesters from the current 12—which would align the program with the maximum program duration under the existing Department of Education Satisfactory Academic Progress rules that govern financial aid eligibility.
• Updating the Pell Communication Program. The bill would update a provision designed to communicate Pell Grant eligibility to pre-college age students eligible for means-tested benefits programs, to ensure the information is directed at the youth’s parent(s) as well. Both youth and their parents would be made aware of their potential Pell Grant eligibility, and about the current costs of college. This change acknowledges that today’s postsecondary students are not only those entering at 18 years old and—more often than not—are adults, with children, well beyond high school age.

The Pathways to an Affordable Education Act includes a number of CLASP’s proposals for reforming the HEA in ways that will allow for financial aid to be more responsive to today’s students. We support this bill and believe adopting these policies would be a significant step in advancing our nation’s student retention and completion goals by addressing the persistent problem of unmet financial need.