Pell Grant Shocker

NEW YORK (MainStreet) — Students who used their Pell Grants to attend Corinthian Colleges as the for-profit college chain was being shut down find that they are not only out on the street, but lost have their Pell eligibility in the bargain.

Now a bill making its way through Congress, the Pell Grant Restoration Act of 2015, plans to change the game so former Corinthian students will be eligible for Pell at other schools. Pell Grants are available to low-income students for expenses such as tuition and fees, books, room and board. The maximum Pell award for the 2015-16 academic year is $5,730.

The 1965 Higher Education Act (HEA), the font of all Federal student aid, provides for the discharge of Federal student loans if a school closes before students complete their programs. However, it does not provide for a reboot of a student’s Pell Grants eligibility in the event of a school closing. Students can only receive Pell for six academic years or 12 semesters. Students closed out of Corinthian due to its bankruptcy may not have enough Pell eligibility to finish at another school.

The Pell Restoration Act will restore Pell Grant eligibility for students who attended an institution of higher education that closed due to Federal violations. The Act, introduced by Senator Barbara Boxer (D-Calif.) and Representative Bobby Scott (D-Va.), is supported by 42 other members of Congress.

“In spite of the warning signs, the Federal government did not step in soon enough to prevent Pell Grant funding from being wasted on the failed Corinthian Colleges system,” said Senator Dick. Durbin (D-Ill.).

“It is only fair that the students who were misled into failing programs have their Pell Grant eligibility restored,” Durbin added. “We shouldn’t be punishing students for the bad actions of for-profit college CEOs.”

Corinthian Colleges, Inc. filed for bankruptcy amid widespread charges of fraud that critics say were enabled by the Department of Education which provided its students with Federally-backed loans and Pell Grants. ED has signed on to the Pell Grant Restoration Act.

“Students who are defrauded by an unethical college or who lose their academic credits when a school closes are entitled to student loan relief, but under current law they cannot restore their eligibility for Pell grants,” said Secretary of Education Arne Duncan. “As a result, they may not be able to afford to start over somewhere else. I commend Congressman Bobby Scott and Senator Barbara Boxer in their leadership on this issue.”

“Corinthian College, Inc., wasted hundreds of millions in taxpayer dollars and left thousands of students in debt without any degrees to show for it,” said Senator Chris Murphy (D-Conn.), who signed on to the legislation. “While we absolutely need to hold abusive colleges and their executives accountable and create stronger protections to prevent any similar misconduct in the future, restoring access to Pell Grants for wronged students will help ensure that students receive the aid they need to continue their education.”

“Students have spent too much time and money trying to achieve a higher education, something that was supposed to help them get on their feet,” said Sarah Audelo, policy director for Generation Progress. “Instead, they were defrauded. We’re glad to see Congress working to right this wrong so students can pursue a degree that will help them support themselves and their families.”