Tucked into Congress’s voluminous stimulus package are significant changes to higher-education law, including the resumption of federal financial aid to prison inmates that was banned in the 1994 crime bill championed by then-Senator Joseph R. Biden Jr.

The restoration of Pell grants for incarcerated students is something of a watershed moment for the criminal justice overhaul movement as it unwinds decades of punitive practices in favor of finding avenues to reintegrate incarcerated people into society.

The measure was part of a bipartisan deal struck by House and Senate education leaders to address affordability and equity in higher education, then it was attached to the $900 billion stimulus bill making its way to President Trump’s desk. The package also includes the simplification of the federal financial aid application process, a significant expansion of students eligible for federal aid, and the forgiving of more than $1 billion in federal loans held by historically Black colleges and universities.

For two years, efforts to rewrite the Higher Education Act have stalled repeatedly as leaders wrestled with polarizing issues, like college affordability and campus sexual assault. But with Senator Lamar Alexander, Republican of Tennessee and the chairman of the Senate Education Committee, leaving Congress this year and looking for a legacy accomplishment, Democrats seized the opportunity to secure long-sought policy wins that address some of the racial and financial inequities highlighted by the unrest of the past year.
The reversal of the Pell grant ban for prisoners was perhaps the most remarkable achievement, Democrats and criminal justice advocates say. Although lawmakers from both major parties have warmed to the idea of restoring the aid, Republicans have been hesitant to do it without restrictions.
The aid was banned in the crime bill signed by President Bill Clinton in the “tough on crime” era, a law that has dogged President-elect Biden because of its associations with the mass incarceration of Black men. Lawmakers from both parties argued then that convicted felons should not take financial aid from cash-strapped college students.

One of the 1994 bill’s chief champions was Mr. Biden, who has since said that his support for it was a mistake. His campaign platform promises to eliminate barriers for formerly incarcerated individuals, including access to public benefits and Pell grants.

Two years ago, leaders in both houses, as well as the education secretary, Betsy DeVos, agreed that the ban should be revisited — a turning point that brought a groundswell of support from all ends of the political spectrum. In 2015, President Barack Obama’s Education Department piloted an experimental program called “Second Chance Pell” that allowed 12,000 incarcerated students to be eligible for the financial aid for distance learning and other programs that required tuition. Ms. DeVos expanded the program and urged Congress to make it permanent.

“It was a bipartisan mistake and a bipartisan correction,” said John B. King Jr., who oversaw the Second Chance Pell program when he served as secretary of education under Mr. Obama.
“This is exactly what we hoped for when we started the pilot,” added Mr. King, who now serves as the chief executive of the Education Trust, which has lobbied to restore the grants. “This is saying that the goal of the criminal justice system ought to be giving people the opportunity to take their lives in a different direction, and leave incarceration better prepared to support their families and support their communities.”

The higher-education package would also restore Pell eligibility for students who have been defrauded by their colleges and for others who have been convicted of a drug-related offense. The expansion would make an additional 555,000 students newly eligible for the grants and 1.7 million more eligible to receive the maximum award. Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the Democratic leader, called the Pell expansion “historic.”

Representative Robert C. Scott of Virginia, the chairman of the House Education Committee, who secured most of the provisions, said he was proud that Democrats were able to secure “sweeping reforms on behalf of students across the country.”

“Congress has a responsibility to expand access to quality higher education, which remains the surest path to the middle class,” Mr. Scott said. “While this is not the comprehensive overhaul of the Higher Education Act, and there is still work to be done, this proposal will help millions of students.”

The package sends Mr. Alexander into retirement with a hard-fought legacy of simplifying the federal government’s financial aid form, called the Free Application for Federal Student Aid, or FAFSA. For years, Mr. Alexander has shown up to public appearances and committee hearings with a copy of the pages-long application, unfolded it in dramatic fashion, and urged lawmakers to act. He said that in his home state, the form is “the single biggest impediment to Tennesseans applying for two years of tuition-free college.”

The new package will cut the number of questions from 108 to a maximum of 36.

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