Govt. saves millions in Pell Grants

Errors made in previous school years’ financial aid applications have been reduced this year, saving the U.S. government millions of dollars.

The Obama administration announced Tuesday that it cut a total of $17.6 billion in improper payments made by federal agencies in 2011, including $300 million saved in Pell Grant errors that will help the program’s limited funding achieve its intended purpose.

Pell Grants are a form of need-based, federal financial aid awarded to students. Of USF’s current undergraduates, 30 percent receive funding for college through the Pell Grant, according to USF Planning, Performance and Accountability statistics.

Jack Lew, director of the White House Office of Management and Budget (OMB), said in a conference call that “improper payments” occur when the federal government makes errors when disbursing funds, either in the wrong amount to the wrong people or for the wrong purpose.

In an interview with The Oracle, Haley Chitty, spokesman for the National Association of Student Financial Aid Administrators, said the Pell Grant error rate dipped to 2.7 percent in 2010-11 from 3.12 percent in 2009-10 and 3.5 percent in 2008-09.

“We’re seeing a slow decrease in payment errors,” he said. “But this is just a small fraction of what was spent on Pell Grants. In 2011, there was more than $35 billion spent on Pell Grants, so this $300 million is just a fraction of what was saved.”

Chitty said the government still needs to weed out all fraud and abuse and continue to support the Pell Grant, which legislators discussed cutting completely during the summer’s debt ceiling debates.

“Unfortunately, we’re seeing the Pell Grants somewhat targeted,” he said. “We’ve certainly seen some proposals to really slash the program, and, so far, we’ve avoided that. But at the same time, we’ve seen some significant cuts. All things considered, we’re sort of counting our blessings.”

During the conference call, U.S. Department of Education Secretary Arne Duncan credited the decline in errors to the new version of the Free Application for Federal Student Aid (FAFSA), which provided more accurate aid applications for the 2011-12 academic year.

“We … found too many students simply failed to complete the application because it was simply too long and too complicated,” Duncan said. “The financial aid form itself had become a barrier to college access, and that was an unacceptable and untenable situation.”

Duncan said the new FAFSA asks students fewer questions and uses “skip logic” to allow participants to bypass certain questions based on their answers. It also allows students and parents to enter income data directly from the Internal Revenue Service website, making the online process faster for students and enforcing accuracy.

“We cut the amount of time it takes to finish the application by about a third,” he said. “Almost 21 million students completed the application in 2010-11. That’s a full 50 percent increase from just three years earlier.”

OMB Federal Controller Danny Werfel said during the conference call that the government was first required to measure improper payments in 2002, with the first government-wide error measurement occurring in 2004. The overall error rate in government spending increased since then, peaking at 5.42 percent in 2009. The 2011 rate was 4.7 percent, a result of the administration’s “Campaign to Cut Waste.”

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