Pathways to an Affordable Education Act

To amend the Higher Education Act of 1965 to make certain improvements in the Federal Pell Grant Program, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Pathways to an Affordable Education Act (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Increasing the Federal Pell Grant and adding a cost of living adjustment. Sec. 3. Funding the Federal Pell Grant program through mandatory appropriations. Sec. 4. Mandatory Federal Pell Grant increases. Sec. 5. Federal Pell Grant duration limit. Sec. 6. Restoration of eligibility for year-round Federal Pell Grants. Sec. 7. Expansion of Pell Grant exclusion from gross income. Sec. 8. Federal Pell Grant early communication. Sec. 9. Contribution from adjusted available income. 2. Increasing the Federal Pell Grant and adding a cost of living adjustment (a) In general Section 401(b)(2)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(b)(2)(A) (i) (I) for award year 2017–2018, $9,139; and (II) for award year 2018–2019 and each subsequent award year, the amount of the maximum Federal Pell Grant determined under this clause for the immediately preceding award year, increased by a percentage equal to the estimated percentage increase, if any, in the Consumer Price Index (as determined by the Secretary, using the definition in section 478(f)) for the most recent calendar year ending prior to the beginning of that award year; plus (ii) any additional amount specified for the maximum Federal Pell Grant in the last enacted appropriation Act applicable to that award year, less . (b) Effective date The amendment made by subsection (a) shall apply with respect to Federal Pell Grants awarded under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a 3. Funding the Federal Pell Grant program through mandatory appropriations (a) In general Section 401(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(b) (1) in paragraph (2), by adding at the end the following: (C) (i) For fiscal year 2017 and each succeeding fiscal year, there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to provide, in combination with any amounts separately appropriated under subparagraph (A)(ii), Federal Pell Grants under this section in the amount specified in subparagraph (A) to all eligible students. (ii) The amounts made available by clause (i) for any fiscal year shall be available beginning on October 1 of that fiscal year, and shall remain available through September 30 of the succeeding fiscal year. ; and (2) by striking paragraph (7). (b) Effective date The amendments made by subsection (a) shall apply with respect to Federal Pell Grants awarded under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a 4. Mandatory Federal Pell Grant increases (a) Increases Section 401(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(b) (1) in paragraph (2)— (A) by striking (2) The amount of the Federal Pell Grant (2)(A) The amount of the Federal Pell Grant (B) by moving the margins of subparagraph (A) two ems to the left; and (C) in subparagraph (A)— (i) by redesignating clause (iii) as clause (iv); and (ii) by inserting after clause (ii) the following new clause (iii): (iii) the amount of the increase calculated under paragraph (7), less ; and (2) by adding at the end the following new paragraph: (7) (A) The amount of the maximum Federal Pell Grant for which an eligible student is eligible during an award year, as specified in paragraph (2)(A) for that award year, shall be increased by the difference between— (i) the average total cost of attendance for first-time, full-time undergraduate students in the United States at public 2-year institutions for students living on-campus, as determined by the National Center for Education Statistics, for the last academic year preceding the beginning of the fiscal year for which the increase is made; and (ii) the amount of the maximum Federal Pell Grant for which a student is eligible during an award year, as specified in paragraph (2)(A) for that award year. (B) For purposes of subparagraph (A), an eligible student is an otherwise eligible student who has a negative or zero estimated family contribution. . (b) Effective date The amendments made by subsection (a) shall apply with respect to Federal Pell Grants awarded under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a 5. Federal Pell Grant duration limit (a) In general Section 401(c)(5) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(c)(5) 12 semesters 15 semesters (b) Effective date The amendment made by subsection (a) shall apply with respect to Federal Pell Grants awarded under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a 6. Restoration of eligibility for year-round Federal Pell Grants (a) In general Section 401(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(b) (8) Year-round federal pell grant students (A) In general Notwithstanding any other provision of this subsection, the Secretary shall award, to an eligible student who meets the requirements in subparagraph (B) who has received a Federal Pell Grant for an award year and is enrolled in a program of study for one or more additional payment periods during the same award year that are not otherwise covered by the student’s Federal Pell Grant, an additional Federal Pell Grant for the additional payment periods. (B) Eligibility In order to be eligible to receive the additional Federal Pell Grant for an award year that is described in subparagraph (A), a student shall, in addition to meeting all eligibility requirements for the receipt of a Federal Pell Grant— (i) be enrolled on at least a half-time basis for a period of more than one academic year, or more than 2 semesters or the equivalent of 2 semesters, during a single award year; and (ii) be enrolled in a program of instruction at an institution of higher education for which the institution awards an associate or baccalaureate degree or a certificate. (C) Amounts In the case of a student receiving more than one Federal Pell Grant in a single award year under subparagraph (A), the total amount of the Federal Pell Grants awarded to such student for the award year shall not exceed an amount equal to 150 percent of the amount of the maximum Federal Pell Grant for which such student is eligible, as specified in paragraph (2)(A) for that award year. (D) Inclusion in duration limit Any period of study covered by a Federal Pell Grant awarded under subparagraph (A) shall be included in determining a student’s duration limit under subsection (c)(5). (9) Crossover period In any case where an eligible student is receiving a Federal Pell Grant for a payment period that spans 2 award years, the Secretary shall allow the eligible institution in which the student is enrolled to determine the award year to which the additional period shall be assigned. . (b) Effective date The amendment made by subsection (a) shall take effect on July 1, 2017. 7. Expansion of Pell Grant exclusion from gross income (a) In general Paragraph (1) of section 117(b) received by an individual received by an individual— (A) as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or (B) as a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as amended by the Pathways to an Affordable Education Act . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2015. 8. Federal Pell Grant early communication Section 485E of the Higher Education Act of 1965 ( 20 U.S.C. 1092f (1) in subsection (a), by inserting elementary schools, secondary schools, (2) in subsection (b)— (A) in paragraph (1)(A), by striking students students and parents of students (B) in paragraph (2)— (i) in the paragraph heading, by inserting Elementary and secondary (ii) by inserting elementary schools, financial aid, (iii) by striking notify students in secondary school notify students in elementary or secondary school (iv) by striking students' junior year of secondary school students’ sixth grade year of school (v) by striking students in secondary school students in sixth grade 9. Contribution from adjusted available income (a) Amendments (1) Dependent students Section 475(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1087oo(b) except that except that for purposes other than subpart 1 of part A of this title (2) Independent students without dependents Section 476(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087pp(a) except that except that for purposes other than subpart 1 of part A of this title (3) Independent students with dependents Section 477(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087qq(a) except that except that for purposes other than subpart 1 of part A of this title (b) Effective date The amendments made by subsection (a) shall apply with respect to award year 2017–2018 and each succeeding award year.

Summary: Pathways to an Affordable Education Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to modify provisions related to the Federal Pell Grant program. Among other things, it: increases the maximum Pell Grant award for academic year 2017-2018 and adjusts it in subsequent award years to account for inflation, converts the Pell Grant program into a mandatory spending program, increases from 12 to 15 semesters a student's lifetime Pell Grant eligibility period, and restores year-round grants. Additionally, the bill amends the Internal Revenue Code to include, as a qualified scholarship excludible from gross income, any amount received as a Pell Grant.