10 Ways to Save the Pell Grant

Ideas to preserve federal financial aid for the neediest college students.

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The Pell Grant, which is considered a financial aid lifesaver for the nation's neediest college students, is in danger of getting a buzz cut.

The House of Representatives has passed legislation that would roll back Pell Grant funding to 2008 levels and trim the maximum grant of $5,550 by $845. Meanwhile, the Obama administration has proposed eliminating the Pell Grant for summer school.

Mark Kantrowitz, founder of FinAid, the popular financial aid website, believes there are better alternatives to shrinking the Pell Grant, which he calls the nation's "most effective federal student aid program."

Here of some Kantrowitz's ideas that include finding revenue from other educational programs, as well as making the Pell Grant program more efficient. I certainly hope that at least some of these ideas catch Washington's attention.

[Read more about a potential shortage of college grants in 2011 and 2012.]

1. Cut education tax benefits: The federal government offers some amazing tax credits to parents to help defray the cost of college. I've taken advantage of them myself. This year my husband and I claimed a total of $5,000 in federal education tax credits thanks to my two children who are in college.

Kantrowitz thinks these education tax credits and benefits are too generous—and I can't disagree. The tax benefits primarily benefit middle- and upper-income families. Getting rid of the tax perks would provide enough revenue to ensure the survivability of the Pell Grant program.

2. Eliminate subsidized interest on student loans: Currently the federal government pays the interest on subsidized federal Stafford loans while a student remains in college. Ending that practice would generate money to fully fund the Pell Grant program.

[Learn more about subsidized Stafford loans.]

3. Limit how long you can qualify for a Pell Grant: Currently you can qualify for a Pell grant for up to 18 semesters. That's nine years! Kantrowitz suggests cutting eligibility to 12 semesters. Students pursuing an associate degree would have even less time to take advantage of the federal grants.

4. Peg the Pell Grant to better academic performance: Tie part of the Pell Grant to a student's grades. A student earning a "D" average would get nothing, while "A" grades would receive the full amount. Another idea: raise the qualifying GPA from the current 2.0 GPA.

5. Provide bonuses: Give Pell Grant recipients a bonus if they graduate within the traditional period of time—four years for a bachelor's degree and two years for an associate degree.

6. Restrict Pell Grants to universities and community colleges: Don't let students who are not in the degree-track obtain Pell Grants for such vocational pursuits as massage therapy and cosmetology.

[Follow 6 steps to beat a shortage of financial aid.]

7. Limit Pell Grants to institutional charges: Currently, after paying tuition, fees, and books, students at low-cost schools can use any leftover money on living expenses. Prohibit that practice.

8. Require matching grants: Makes colleges match Pell Grant funding.

9. Require recipients to attend school at least half time: This would direct the money toward the people with the best chances of graduating.

10. Discriminate by graduation rates: Limit Pell Grant eligibility to students who attend schools that meet minimum graduation requirements.

Corrected on : Correction on 4/6/11: An earlier version reported an incorrect maximum grant amount.