The American Public has recently learned how the law makers have proposed to slash $303 million Pell Grant money. There will be several scenarios how the reduction will affect the number of students who will negatively be impacted. However, it does not matter what the scenarios are, they certainly do not look good for both students and certain higher education institutions. There are, several things may happen:
1. Students will take more loans.
2. Students have to work more hours to fill the gap.
3. Theoretically, point # 2 above will have negative impacts on graduation rate.
4. Decreasing on college students enrollment may accelerated, and the magnitude will depend on the elasticity of demand for education services at a certain institution.
5. Drop-out rate may increase and time to graduate may take longer than what it was in the past.
6. Colleges will have to work extra hard to get money from other sources to fill the gap and staff layoff is imminent or has happened.
7. Small private and Liberal Arts Colleges will be impacted most from the new policy, unless they will have a successful capital campaign or fund raising.  Harvard, Stanford, Yale, Cornell, Columbia and the University of Southern California correctly anticipated such an event to occur.  However, smaller colleges are BAU.
8. More colleges will need to close their doors, unless demand for their education increases such that it offsets the reduction in the Pell Grant. Increasing in enrollment may not likely to happen, especially at small private or Liberal Arts colleges as evidence may have shown.
9. In order to survive, some colleges have or may need to downsize their program, especially institutions that are not funded by the state or tax payer money.
10. The growth on student loans debt will certainly increase faster than it has been in the past.
The Association has conducted a study to see the potential impacts of such reduction by state as shown below. Please note that the percentage calculation is just for first-time full-time (freshmen) degree seeking students who receive federal grants money (not just the Pell Grant).